A big long-term financial goal for many people is saving enough to retire happily. The good news is that the power of compounding interest is on your side, especially if you start young and stay consistent.
1. Envision your future self
Picture yourself in retirement. Where are you living? What are your hobbies? Look ahead to determine what your actual goal is. At what age do you hope to retire? Is there outstanding debt to tackle? Do you see cruise lines and margaritas?
When setting a retirement savings goal, avoid the mindset that things are too big or out of reach. Plan the life you dream of, set the goal, and make it official. Write it down somewhere prominent so you’ll see it often. Regularly visualizing your retirement goals can work wonders to help you stay on track toward reaching them.
3. Factor in rising medical costs
It’s not uncommon for medical needs and expenses to rise as we age, which is why some retirees regret not taking better care of their health when they were younger. Medicare premiums for 2021, at a glance, would have you paying up to $458 per month, or $5,496 a year—but don’t forget deductibles, pre-existing conditions, and any long-term care you may need to feel supported and secure. Consider the costs of everyday needs like prescriptions as well.
4. Set up tax-advantaged accounts
There are tools already in place to use to your advantage, like accounts designed specifically for long-term financial growth.
Tap into your employer’s retirement plan if they offer a 401(k), and take advantage of any employer match programs. If a 401(k) isn’t an option, setting up an IRA can be a smart investment for retirement savings, too.
It’s a wise move to automate your contributions to these accounts instead of constantly allocating what’s left at the end of the month. Committing to “pay yourself first” can help with steady progress and accruals.
6. Set your 65th birthday in your calendar
In fact, mark three weeks before your 65th birthday—that’s when you’ll decide whether to sign up for Medicare. You’ll want to enroll early for these benefits since late sign-ups can trigger delayed coverage, penalties, and possible expenses.
Of course, private or out-of-pocket options are available (refer back to your plan), but Medicare can provide coverage to individuals who wouldn’t otherwise have it, and at a reduced cost.
Knowing the year of your 65th birthday also helps you envision the road ahead and can get you thinking about where you want to be in life by then. Remember, retirement is about living the life you’ve always imagined—this should be fun to plan!
7. Consider finding a financial partner
If you need guidance, shop around for a financial advisor, preferably one with Certified Financial Planner® (CFP) status. Then set up a meeting to review your retirement savings plan. A good advisor will make sure you’ve done the math correctly, help draft a plan to get there, and ensure your plan matches your goals and values.
Having an expert partner in your corner can reduce the anxiety of an unknown future and help you envision (and prepare for) unexpected expenses.
Once established, it’s a good idea to review your retirement plan with your advisor at least once a year.
