Retirement planning is often seen as the next major life stage. At this point, individuals grow their investments portfolios while seeking new investment opportunities and reviewing existing strategies.
At this stage, it can be beneficial to consolidate pension pots and take steps towards lowering debt or investigating long-term care insurance options.
20s
Your retirement may seem far away in your 20s, but it is wise to start saving and investing early so the power of compound interest works in your favor.
As you make this transition, attempt to establish an emergency fund capable of covering six months’ expenses – so that if something comes up financially unexpectedly, your retirement investments won’t have to be touched for emergency costs.
With an extended investment horizon, it may be wise to increase the percentage of stocks that provide potential for higher long-term returns in your portfolio.
30s
Once you’ve established yourself as an adult (or at least learned how to create a budget), it’s time to save for retirement. A 401(k) with employer match, health savings accounts and individual retirement accounts are good ways to do just that.
Avoid incurring debt during this time; the more debt you owe, the less savings are possible due to compound interest. A financial expert can assist in finding an optimal strategy tailored specifically to your personal situation.
40s
As you begin your 30s, mortgage and childcare payments may become your focus; retirement may still seem far away; yet now is an opportune time to start saving and investing for retirement if this hasn’t already become part of your plan.
Financial professionals can assist in setting savings goals and developing tax strategies for retirement assets such as 401(k), IRA or Roth IRA accounts. They may also suggest debt reduction strategies to free up cash for investments in your future.
50s
As your 50s come closer, retirement may seem closer. Now is a good time to assess your savings rate and plan accordingly, according to Serio.
Debt management can also help ensure a more expense-free income during retirement, she notes.
Actions such as downsizing your home and limiting vacation spending could help you save more. And having an exit strategy should you need to work past 65 is also crucial.
60s
Retirement may still be years away, but now is an excellent opportunity to reimagine its definition and reduce debt while living more frugally.
At your current earnings peak, now is an opportune moment to allocate more funds into 401(k) and other retirement accounts. Furthermore, consider whether part-time work might help offset income tax increases associated with nearing retirement age.
70s
Plan now for when it’s time to leave your day job behind! Start by envisioning the lifestyle you envision living after retirement and matching that up with any necessary financial resources.
At this point, it would be wise to utilize the Society of Actuaries Longevity Illustrator tool, which helps estimate your life expectancy and evaluate how long your savings will last. Be prepared to adjust your retirement savings rate as necessary.
80s
Retirement may seem far away in your 20s, but saving now is crucial. Take advantage of contribution limits and the compounding effect by starting to save today.
At this age, it’s also wise to evaluate all sources of retirement income such as Social Security and pensions as well as required distributions from retirement accounts, then compare this total against expenses. You may need to fine-tune your investment strategy, including adding guaranteed income streams; or reduce lifestyle expenses.
90s
This decade is an excellent opportunity to set spending goals that reflect what you expect you’ll need for retirement, including factors like inflation which may shift an optimum annual spend rate higher or lower than anticipated.
As we enter 2019, it’s also wise to be wary of lifestyle creep, which makes justifying more expensive car purchases or extravagant vacations more feasible. It is crucial that spending be kept under control so you can save more in the future.
