Retirement 101 – Why You Should Start Planning NOW

Why SHOULD you start planning now?

You know you’re looking forward to retiring someday.  I think we all get to that point – maybe when we’re fifty or so.  We start dreaming of the perfect retirement.  It’s going to be great.  You’ll sit on the beach, sipping drinks with umbrellas after a hard day on the golf course.  You don’t even need to do any retirement planning because it’s going to be so AWESOME!!!

Eeek!  (Screeching sound.)   Not so fast.  If you haven’t already started planning for retirement, you might have to say “goodbye” to those little umbrella drinks on the beach.  If you haven’t started planning, why not?  Personally, I think we just let LIFE get in the way.  Stay with me here:

• When you’re 20’ish

Retirement isn’t even a blip on your radar.  You just graduated from college and landed your first “real” job.  Your paycheck goes to buying a new car, getting your first apartment, buying new furniture, and maybe paying off those student loans. Besides, only old people like your grandparents are retired.  You have the rest of your life to think about retirement.

• Now, you’re 30

Life is really busy, now.  Maybe you’re married, perhaps you even have children.  All you can really concentrate on is the kids – how to get them to their practices and games on time, through high school, and how to pay for college without going broke.  Work is busy, sometimes too busy.  Both of you are probably working and there just isn’t enough time for planning.  There’s no extra money to put aside for retirement.  Besides, your parents haven’t even retired yet.  Thirty more years to work before you can retire – there’s plenty of time to catch up later.  And retirement planning goes on the back burner – again.

• 40 is in your rear-view mirror

The clock keeps ticking.  Your kids are finishing college and you’re still working hard.  And life just happens.  You need to replace the roof.  Someone (your teenager) totaled your car and insurance isn’t going to pay you enough to replace it.  Your daughter is getting married and who knows how much the wedding is going to cost?

Your parents just retired and now you start to panic.  You meant to start saving for retirement by now, but something always took precedence.  Honestly, you haven’t saved ANYTHING!  Got to get started on this!

• You made it to 50

Life speeds by . . . each year seems to go by faster.  You finally started saving for retirement.  Now that you’re in your 50’s, you have to play catch-up with your retirement savings.  Let’s see . . . how much would you have to save every month to make sure you have enough for retirement?  If you do without food three days a week, never turn on the lights at night and walk to work, maybe you can put back enough money into your 401(k) each month.  Retirement planning?  Nah, you’ll just put back money and hope for the best.

• Wow! You’re 70.  Will you ever be able to retire?

Where did the time go??  You can’t believe you just turned 70.

People in the office keep asking you when you’re going to retire.  At first they were subtle, but lately they’ve been hiding your chair.  Yesterday they even hid your computer.  You know you can’t stop working because you just never put enough back to ensure you would be “comfortable”.  Social Security and the small amount in your retirement fund would NEVER provide enough income each month to afford the life you hoped it would.  Life is so unfair!

If only retirement planning had been a priority throughout your life.

Does it really have to be that hard?

So, let’s get real.  We don’t have to “settle” in retirement.  It doesn’t take much to make sure our retirement plan is in place.  The secret is to start early, maybe as early as our 20’s.  The earlier we start, the more time our money has to work for us (think compounding).  We shouldn’t wait until we’re in our 40’s or 50’s to start saving.  Of course, if there’s a big fat zero in our 401k, then today – NOW . . . is the time to start saving.  Is it ever too late to start?  Well . . . if you’re already retired, then yes, it’s MIGHT be too late.  But then again, there are things you can do even after you retire to supplement your income.  More on that in another article.

What is the secret to saving?

Start small.  When you get your first raise at work – put at least half of it into your 401k (or whichever plan type you have) and add the other half as part of your income.  Most plans are set up to take a percentage of each paycheck for your retirement account (whatever you tell the company to take out when you sign up).  For example, if you receive a 2% raise, put 1% into your retirement plan each paycheck and add the other percent to the amount you take home after all the deductions are taken out.  (An even better plan is to put the whole raise into your retirement plan . . . but let’s be realistic . . . that probably isn’t going to happen – at least not at first).  Try to increase your contributions each year until you can max out the amount the government lets you contribute.

My complete disclosure

I didn’t really start thinking about retirement planning until I turned forty.  Should I have started saving sooner?  Most definitely . . . but you know how it is . . . life got in the way.  I’m just glad I started when I did.   Both my husband and I began faithfully putting money in our retirement plans at work.  Every time we got raises, we increased our retirement savings until we were able to put aside the maximum amount we could afford each year.  We didn’t always hit the maximum the government allows, but it added up.

Our long-term retirement plan was simple:  make sure all our bills were paid off before I retired, then when I turned 65 and could file for Medicare, I would retire.  My husband and I wanted to play golf and travel, and we wanted to do it before we were too old to enjoy it.  I also had a personal goal to read all the books I never got a chance to read when life was busy . . . and maybe even write a few books on my own.  Life. Would. Be. Great.

The “what-if’s” of life

But . . . and I’m just going to throw this out there, since it is the elephant in the room . . . how many of us have complete control over our career and our future?  Not everyone gets the chance to choose their retirement date – sometimes it is “chosen” for us.  Perhaps you should spend some time thinking about what retirement looks like for you . . . and what you would do if someone else chose next Friday as your retirement date.

Like many things in life, we make our plans and then “life” happens.  My husband retired at the beginning of 2016 – his choice.  In 2016, my work situation became unbearable and I began to think about alternatives. Was I too old to find another job?  Could I retire earlier?  Could we make it if I did retire?  We worked the numbers and figured we could live comfortably.  January 2, 2017 was my last day at work and I officially retired!   My new adventure has begun.  Reading, writing and playing golf.  Yea!!

The “How” of retirement planning

No one else is going to do your retirement planning for you (at least not for free).  You should start planning NOW.  But, where do you even start??  For information about the steps you can take now . . . check out the article, Six Steps for Retirement Planning for some great tips to get you started with your planning.

Where are you on your retirement planning journey?  Have you started?  Leave me a comment below and let me know your biggest question about retirement.