Getting into the Right Retirement Mindset throughout your Career
While most individuals in their early and late 20s think that their retirement years will take ‘forever’ to arrive, the truth is that this time of your life will arrive far sooner than you realize. The main secret to creating a good-sized retirement account is to start saving as quickly as possible after you start working.
Getting into the right mindset regarding retirement savings and taking the appropriate action will help ensure that you get to enjoy this time of your life without worrying about money – regardless of how old you currently are.
This is the time to take full advantage of any 401(k) matching programs your company may be offering, and if you enroll in a program like this before reaching the age of 25, it will significantly reduce the amount of money you’ll need to save on your own than if you waited until reaching your 30s and older.
Studies have revealed that if you’re able to increase your income by just $5,000 per year in your 20s, it could enable you to accumulate an additional $500,000 during your working life. Just saving 10% of this additional income would see your retirement account grow by a minimum of $50,000.
One of the best things you can do to prepare financially for your retirement during this time of your life is to stop accruing consumer debt. Wherever possible, pay cash for anything you purchase and direct any bonuses, tax refunds or overtime income towards getting debt repaid as quickly as possible.
Although there is nothing wrong with splurging on a treat occasionally, money should only be spent if it won’t cause you to go into deeper debt.
This is the time to make sure that you become as indispensable as possible to your employer, and one of the best ways to do this is to improve your existing skillset. Consider taking additional training courses that will help you to perform better in the workplace – this could even lead to you being given unexpected raises over time, which could then be invested as well.
At this time in your career, you should consider catching up on retirement savings wherever possible – especially if you weren’t able to contribute to any dedicated plans earlier in your career. By now, the vast majority of your debt should also have been cleared – including your mortgage and any student loans that may have still been looming.
The extra cash that would previously have been used to repay the debt should now be channeled into your retirement accounts wherever possible. In addition to a 401(k), you should set up a Roth account – this will enable you to save a larger, tax-free amount of money towards your retirement every year.
The main aspect that will ensure a comfortable retirement is to make it as easy as possible to save money throughout your working life. Sticking to a realistic budget and not spending frivolously on unnecessary items will allow you to retire without having to worry about finances. If you’d like to learn more about saving towards your retirement, contact us today.