It can be difficult to imagine what life will be like when you retire, especially if your retirement date is decades from now. If your retirement seems like light-years away, do you really need to think about it now? The short answer is: yes! It's never too early to start saving and planning for your financial future.
You don't have to know every single detail to try to prepare for a comfortable, secure — and fun — retirement. Here are a few simple steps you can take to get started today:
Set a goal
Research shows that 36% of Americans lose sleep over financial concerns, which could include saving enough for retirement. It doesn't have to be this way. By trying to set a realistic retirement goal and developing a plan, you could achieve peace of mind now and in the future.
Start by finding out how much you'll need to maintain your desired retirement lifestyle. One common rule is that retirees need up to 80% of their current annual income to retire comfortably.
Wondering how much you need to save for retirement? Estimate your retirement needs using a retirement calculator.
Harness the power of compound interest
The sooner you can start saving for retirement, the better. When you start early, your retirement fund will have more time to grow through the power of compound interest.
One way to think about compound interest is like a snowball rolling down a hill. As it rolls, the snowball will pick up more snow and get bigger and bigger. The same idea applies to your retirement fund. By saving early and often, you give your savings snowball a longer “hill" to roll down and a greater chance to accumulate interest. Try using an investment calculator to get an idea of the power of compound interest in action.
Make your future a priority
It can be easy to let other savings goals and expenses take priority over your retirement, especially when it feels so far away. But in order to try to have a secure and comfortable retirement, it's best to add to your fund consistently. This may mean putting retirement ahead of competing savings goals, like your child's college fund. Remember, there are loans and scholarships for college, but not for retirement.
As soon as you have a strong financial foundation and three to six months of emergency fund in place, it's a good idea to make saving for retirement your next goal. If your employer offers a 401(k) retirement plan with a match program, try to contribute enough to receive the full amount offered. Another option to help you work towards your retirement goals is a traditional or Roth IRA. It's okay if you need to start with a small amount like $25 or $50 per month — you can gradually increase your contributions whenever possible. The most important thing is that you get started!
Get help on the road to retirement
At Wright-Patt Credit Union (WPCU), we want to help you reach your retirement goals so you can live the life you want to live well into the future. When you're ready to start planning for retirement, we're here to help you every step of the way.
The experienced CFS* Financial Advisors on WPCU's Retirement Solutions team, available through CUSO Financial Services, L.P. (“CFS"), can help you develop a plan that may help put you on the path to success. Contact us today to set up a complimentary, no-obligation appointment.