A decade of gains in personal finance may have created a sense of complacency when it comes to retirement planning. In fact, the 2022 edition of the Horizons Retirement Survey from Vancouver’s RGF Integrated Wealth Management shows little progress in this area. While more people are saving for retirement and taking care of their finances, few are making the necessary preparations for a comfortable retirement. Fewer people are planning their estates and power of attorney, and their retirement aspirations are increasingly about lifestyle rather than financial security.
Although many expenses remain the same when you retire, you may need to pay more for healthcare, travel expenses, and new hobbies. Some may even disappear. You should start planning your personal finance retirement decades in advance. By doing so, you’ll have more time to save for retirement and have peace of mind about your financial situation. While Social Security may be a great source of retirement income after taxes, you’ll still need to make sure that you have a sufficient savings fund to cover the expenses of your chosen lifestyle in retirement.
For many people, the most convenient way to save for retirement is to participate in an employer-sponsored 401k plan. You can make automatic withdrawals from your pay each pay period, and many employers match employee contributions. Many companies will match up to 50 cents of each dollar you contribute, which amounts to a guaranteed return on investment. So, if your employer matches your contribution, there’s no need to worry about where to put your money.
You can always hire a financial professional to help you plan your financial future. Make sure you work with someone who is a fiduciary, meaning that they are bound by law to act in your best interest. There are financial planners who charge by the hour or by the project, and you can choose according to your budget and personal values. Once you have figured out how much money you’re able to save and how much you’d like to spend, you can start planning for your retirement.
It’s crucial to have an emergency fund, or cash available for unexpected situations. Financial experts recommend that people set aside 10% of their income to save for retirement, which should be equivalent to three to six months’ worth of expenses. Then, when you hit the emergency, use this money to meet other financial goals. And don’t forget about investing. It’s always better to invest than spend! You’ll be glad you did. This way, you’ll have a safe and sound future when you’re older.
If you have a credit card balance of $3,000, it’s going to take you 222 months to reach retirement. You’ll spend almost 18 years just paying off the balance, which includes interest. You’ll need to pay a total of $3,923 over the 222 months, which is the equivalent of nearly a $1,000 over the cost of a jet ski. The savings are substantial. However, remember that the more you can save, the more money you’ll have left to invest in the future.