Retirement Planning for 20 to 35 Year Olds

If you are in your 20’s, chances are you are most likely not thinking about retirement or financial stability. While it may be very difficult to shift focus on future financial planning, the sooner you begin to take small steps in this direction, the more secure and stable your future will be. Get a good start with these very easy and smart planning tips.   The Value of Starting to Save NOW! It is important to realize the value that comes with saving money early on in life. There is a certain amount of discipline that comes into play when a person plans for their financial future. They have to consider all that is at stake when they retire. Let’s take a look at how much a person needs to save if they start in their twenty’s vs starting in their thirty’s or even forty’s. If I am ‘X’ yrs. old, How Much Should I Save? Recommended Percentage of Salary:

• Twenty’s: 10%-15%
• Thirty’s: 15%-25%
• Early 40’s: 15%-25%
• 45 and above: 40% or more

Now, these are some broad guidelines; however, saving 10% a pay period is a great place to start if you are in your twenty’s. You are at an advantage being still young and already taking control of your money. If you begin saving for retirement at the age of 25 and put away a conservative $2000 a year for only 40 years, you’ll have about $560,000, assuming it will grow at 8% annually. When getting serious about a financial plan there are some key points to keep in mind. These should be worked out before one can truly get their financial plan off the ground.

• Resist the urge to spend excessively
• Think about long-term planning options
• Recognize the ability to save in a recession

  Depending on how early one retires will also determine how much is needed. Regardless, It will take a substantial amount of money to retire and takes much more than a passive approach. Planning In the Early Years…Go For It! Some people may be scared to invest aggressively early in their careers, especially in recent times with the failure of some large funds and hundreds of thousands of people losing their retirement in the markets; however, now is actually the best time to be aggressive. The older one gets, the harder it is to bounce back when losing a large amount of money; however, in the younger years one can invest aggressively and take the risks. Twenty somethings can start investing aggressively early on and move into a moderate investing phase as they get older. Mix It Up It is important make sure that a diversified mix in your portfolio is intact for long-term planning. This mixture should include, but is not limited to, the following:

• Savings Account
• 401K Plan
• Stocks
• Mutual Funds

The recession scares a lot of people into thinking that they will lose money. It is okay to be scared, but this is not an excuse for poor financial planning. People should spread their money around. A savings account should be in place, but there should also be a plethora of other investments such as index stocks and well-known mutual funds. Successful planning requires a lot of research. But it can be done if planned correctly and you will thank yourself when you are approaching retirement and come to the realization that the early start will allow you to maintain your standard of living and more in your retirement