The Right Time to Start Retirement Planning is Now

by | Aug 8, 2019

In an economy where many of us are struggling with student loan debt, steadily increasing housing costs, and stagnant wages, retirement planning tends to fall to the bottom of the priority list. When there are so many other immediate expenses to tend to, it can feel like even more of a financial strain to put away money, knowing you can’t touch it for years. 


You might tell yourself that you’ll start planning for retirement when the “right time” comes. Depending on your financial situation, the right time might be when you pay off all your debt, land a higher-paying job, or get married. Still, the timeline for any of these life events is fuzzy at best, and unexpected factors can delay them by months or even years.


When it comes to retirement planning, that same amount of time can either be your best friend or worst enemy. Take a look at this example to get an idea of how much you could have for retirement if you start at the age of 25 versus 35 or 45.


Your actual retirement numbers will vary based on your cost of living and salary. The point to keep in mind though is the power of compound interest. The earlier you save, the longer your money has time to gain interest over the years. Although you might think you can beat the effects of compound interest by putting away more money as you get older, this could be tough to do if you have other financial obligations. Why not save yourself the trouble and let compound interest do the work for you?


If you’ve been asking yourself when the right time is to start retirement planning, the answer is right now. Here’s how you can get started.


Contribute to Your 401(k)


Or traditional IRA. Or Roth IRA. These are a few of the basic retirement accounts where you can stash away a percentage of your paycheck without even missing it. If your employer offers a 401(k), you can elect to have money set aside from your check before taxes and other deductions, so it’s about as painless as it gets. 


If your employer doesn’t have a 401(k) option, you’ll have to do a little more work in opening your own traditional or Roth IRA, but you can still set up automatic withdrawals each pay period. 


You might have heard that it’s best to set aside 10% of your income for retirement, which can be a stretch if money is tight. If you can’t swing 10%, start with whatever you can. Even 2% is better than nothing. It doesn’t seem like much, but once you see how it adds up over the years, you’ll be super proud of yourself for taking the first step.


Take Advantage of Windfalls


Although your retirement account will mostly be funded by earnings from your job, it’s not a bad idea to add more to it when you come across money from other sources. Whether it’s a work bonus, tax refund, or cash from a side gig, take a portion of it to give some extra cushion to your retirement savings.


If you’re tempted to use all the money for shopping or a dream vacation, remember the importance of making any time the “right time” to set something aside for retirement. You don’t have to put every penny into retirement, but it should be a priority. Plus, it’s money you wouldn’t usually have to spend anyway, so it won’t hurt to gift it to your future self, right? 


Visualize Your Retirement


We get it. It’s hard to prioritize retirement when it’s so far away for most of us. And 

when you’re saving money, you probably don’t feel the same instant gratification you would from playing with a shiny new smartphone or slipping on a comfy new pair of shoes. 


Now, what if retirement planning was something you actually enjoyed doing? To help yourself get excited about it, start visualizing how you want your retirement to be. Write out a list of activities you want to do when you’re retired or what a regular day might look like for you. Create a vision board or mini scrapbook with pictures of places you want to go and people you want to spend time with in your retirement years.


It seems cheesy, I know, but these little things can make planning for retirement more of a reality. It can also get you to be more proactive about setting money aside for it rather than putting it in the back of your mind.


The Point Is…


Retirement is coming, whether you plan for it or not. Since you know that, it’s best to get ahead of the curve and save yourself the stress before it’s too late. It probably doesn’t feel like the most exciting use of your money right now, but trust me, you’ll be glad you planned ahead when you’re comfortably enjoying your golden years. 


Share This