Retirement Tips at Any Age

Planning for retirement is essential to ensuring your long-term financial security and independence. No matter where you are on your retirement planning journey, there are strategies to effectively prepare for your future. Learn the ways to help you feel more confident on your road to retirement.

The Importance of Planning for Retirement

Age 20s and 30s: Early-Stage Retirement Planning

Starting to save for retirement in your 20s and 30s can help you get ahead of the curve and significantly increase your retirement savings. When you are in the early stages of your career, put a portion of your earnings towards retirement so it can begin to grow in value over time.

• Employer Benefits: Make sure to maximize employer benefits by contributing enough money into your 401(k) to receive the company match, if offered. Bypassing a company’s match can result in a missed opportunity to significantly grow your retirement savings.
• Compounding Interest: To maximize the benefits of compound interest, begin investing early and regularly. Even if you invest a small amount, it increases your chances of growth over time. For example, if you invested $100 per month at a 5% rate of return, it could be worth over $200,000 in 45 years.¹ 
• Increase Contributions: Anytime you receive a raise or a promotion, it’s an opportunity to increase the amount of money going into your retirement accounts. This will help you to build your savings quicker and at a rate that is sustainable for you. 
• Lower Tax Bracket: Many people typically find themselves in a lower tax bracket in the beginning of their career versus further down the line. Take advantage of this opportunity by contributing to a Roth IRA or Roth 401(k). Although you will pay taxes on contributions now, it may be more tax efficient to contribute now than later in your career.

Age 40s and 50s: Continuous Retirement Contribution

During your 40s and 50s, you are likely at the peak of your career and have a higher disposable income, which can present an opportunity to put extra money toward your retirement accounts.

• Maximize Contributions: Once you’re age 50, you can make catch-up contributions to your retirement accounts, including IRAs and 401(k)s. This creates an opportunity to provide additional funds on top of regular contribution limits, allowing you to catch up on your retirement savings if needed.
• Diversify Investments: As retirement grows closer, diversification of your investment portfolio becomes even more important to manage risk. It may be wise to shift some of your assets into more conservative investments to promote more modest growth and protect yourself from market volatility.
• Define Retirement Goals: When saving for retirement, ensure your goals and investments are aligned. Consider factors such as your ideal retirement age, healthcare needs, lifestyle expectations and other expenses.

Age 60+: Make Your Savings Last

As you approach retirement age, it’s important to consider the type of lifestyle you expect to have. In your 60s, you need to ensure your retirement savings, supplemented by government benefits, will be enough to support you throughout your retirement.

• Transition Investments: The closer you are to retirement, the more difficult it will be for you to recover from market downturns. Therefore, it’s a good idea to decrease the amount of risk in your retirement portfolios to preserve your savings.
• Lifestyle Adjustments: As retirement grows nearer, it is important to ensure your lifestyle is sustainable with your retirement budget. You might need to adjust your lifestyle to closely align with your budget and financial goals.
• Social Security and Medicare Benefits: During your 60s, you need to choose your Social Security strategy – either taking reduced payments early or delay beyond retirement to receive larger checks later. Additionally, it is important to enroll in Medicare by age 65 or after you retire, whichever comes last. Consult with your employer that provides your health insurance if you need to sign up for Medicate Part A and Part B when you turn 65. Failure to sign up on time can end up costing you throughout retirement.
• Legacy and Estate Planning: Considering the future, the legacy you leave behind is a crucial part of your financial plan. Reflect on your legacy wishes, how you want them to be carried out, and any unique family needs. Estate planning, though complex, is essential to a comprehensive financial strategy. It ensures your wishes are honored and your assets are distributed according to your intentions.

Regardless of where you are on your retirement journey, our Wealth Management by CommunityAmerica Wealth Advisors are here to help you navigate through the decisions that come along with retirement planning.