Planning for retirement can feel like a daunting task, but it’s undoubtedly one of the most important things that you can do for your long-term financial wellbeing. Even if it feels—and literally is—years away, saving money now is the best way for that money to grow and increase your wealth over time. And if you don’t have enough money at the time that you want to retire, you may find yourself having to work for many more additional years.
Retirement planning can generally be thought of as occurring in three stages—young adulthood, midlife, and later midlife. At Prosper Financial, we’re here for you regardless of what stage of life you’re in. Reach out to us today to learn more about how we can support you as you plan for retirement.
Planning for retirement should start early—as soon as you have your first post-high school job, typically when a person is in their early 20s and is launching into their career. While you may not have a lot of money to invest at this time, the thing that’s important to remember is that your investments have a lot of time to grow, so even modest investments can have a big long-term impact. Thanks to compounding interest, the more you put away as a long professional, the more that money will be worth compared to if you put the same amount away 20 years later. Your investment strategy should be the most aggressive at this stage in your life.
At this time in a person’s life—typically when they are between 35 and 50 years of age—there are usually multiple financial commitments that can make saving for retirement more difficult. For example, individuals may be responsible for a mortgage, paying down student debt, supporting children, etc. However, while putting away money for retirement may be more difficult at this stage in life, continuing to save is absolutely critical. What’s more, putting away larger chunks of money than you were doing in your 20s is recommended. You’ll also want to be sure to take advantage of employer-sponsored retirement plans, such as a 401(k) and any matching contributions your employer offers.
Hopefully, as you near retirement age you already have a fairly large nest egg saved up. You should continue saving, but you should also consider more conservative investment strategies at this point in your life as you’re closer to needing the money. If you have maxed out your tax-incentivized retirement savings plan option, you should consult with a financial professional about other savings options that may be relevant to you. Now is also the time to think about how other financial tools and benefits, such as Social Security, may impact your retirement plan.
At Prosper Financial, our financial professionals are here to help you make smart decisions about your finances. To get help planning for retirement, reach out to our team of professionals directly today.