When you’re young and fresh out of college, retirement is likely the last thing on your mind. After all, there are a lot more pressing expenses to think about, like rent, groceries, cable and your phone bill.
While finances are certainly important to keep in mind, retirement planning is about much more than just saving money.
Consider Your Lifestyle
While it’s impossible to tell exactly what you’ll want once you reach retirement age, it doesn’t hurt to think about how you would like to spend your retirement. The term “retirement” has changed so much over the years—it no longer means playing golf and sitting in a rocking chair (unless that’s what you would like to do, of course).
Older adults today are taking advantage of their time in retirement to explore a new career path, travel or go back to school. By considering what you might like to do once you reach that age, you can better prepare. For instance, if you’re set on traveling, you’ll have to put aside money that will be used specifically for travel expenses.
Leave Your Retirement Savings Alone
If you want to make a big purchase like buying a car, it can be tempting to dip into your retirement savings. While that may seem like a convenient decision now, this won’t help you out in the long run.
If you withdraw money now, you’ll be losing interest and you may even have to dole out extra cash to cover withdrawal penalties. Figure out a different financial plan before you decide to dig into your retirement savings.
Work on Paying Off Debt
A load of debt can be a deal breaker for retirement planning. Take care of yourself later by working on paying off your debt now. Take small steps toward paying off that student loan debt by having a chunk of each paycheck immediately go into your savings.
Cut out unnecessary expenses in your daily lifestyle, such as buying coffee each morning or spending money on clothes you don’t necessarily need. Get in the habit of spending less money than you bring in each month.
Ask questions and explore various retirement savings options. The more you know, the better prepared you can be for that chapter in your life. You may even want to think about hiring a financial advisor to help you properly save your money for retirement.
When you’re in your 20s, you’re not expected to know all there is to know about Roth IRAs and Social Security. Having an expert by your side to answer all your questions can be very helpful and give you peace of mind for the future.