Whether you’re 20 or 55, retirement financial planning savings should be a part of your investment portfolio. Saving for the far future can seem confusing and difficult to begin. That’s why we’ve broken down retirement planning for you into 3 simple steps.
When Should You Start Saving?
You should begin investing in your retirement financial planning as soon as possible. For most people, this is when you start working consistently in your early 20s. Invest as much as you can now for your savings to accrue interest over time.
3 Simple Steps to Saving
- Set Financial Goals- It’s a good idea to use a financial calculator to estimate how much you’ll need to save for retirement based on the age you start saving. This can help you set goals for the amount you’ll save and put away for retirement each year. If you have debt and loans, you’ll need to consider how much money you’ll have for retirement after you pay off these expenses.
- Choose a Retirement Plan- After you have your goals, pick your plan. You’ll likely be choosing between a 401k or a Roth IRA or choose to have both. A 401k will be given to you as an option from your employer. If you’re a freelancer, you won’t have this option. Both have their advantages and disadvantages, but it primarily comes down to taxes. With a 401k, you’ll be taxed later down the line when you pull the money out. With a Roth IRA, you’ll be taxed now.
- Dive into Investments- Stocks, bonds, and mutual funds are a great way to add diversity to your retirement account. It’s best to invest early, as the stock market does the best in the long-term, rather than the short-term.
It’s never too early to start saving, so as soon as the money starts rolling in, begin to put some aside for the future.