Don’t wait until it’s too late! Preparing for retirement in your 20s and 30s is a must-do if you want to enjoy life when you’re older. Here are some things absolutely everyone should do.
In your 20s and 30s, retirement may seem so distant that it’s easy to just brush it aside and say, “I’ll just cross that bridge when I get there.” But if you keep putting it off and neglect to prepare for it early on, you’re going to seriously regret it. We guarantee that.
None of us wants to spend our retirement worrying about making ends meet and Do you want to travel and see as much as you can, enjoying your well-deserved freedom?
As early as now, you should do everything you can to prepare for your future. Building up your emergency savings is a good place to start, but that by itself usually isn’t enough. Here are some tips on preparing for retirement in your 20s and 30s.
1. Open a retirement account ASAP and turn your savings into income
The earlier you open a dedicated fund for your retirement, the more you’ll have when it’s finally time for you to retire. This is because putting your money in a fund lets you take advantage of compound interest. This basically means that your savings earn interest, then that interest earns interest, etc.
Take advantage of all the saving opportunities that come your way. For example, your company might have a retirement plan in place for its employees that deducts money from your paycheck automatically to funnel into your retirement fund. This makes it much easier for you to save up for retirement, so take advantage of it.
2. Set a target and create retirement budget
One very common mistake that people make when preparing for retirement is they underestimate how much they’d actually need. That’s why it’s important that you set your budget even as early as now.
Take note of how much you spend each month: your fixed expenses, your food and entertainment, your insurance, and so forth. These expenses may change over the time, but having an idea of how much you need to save up this early is a good idea so your funds don’t run out during retirement.
3. Work on boosting your earning potential
Your 20s and 30s are the best time to work on increasing your ability to earn an income. You could do this by climbing up the corporate ladder, boosting your knowledge through short courses or even graduate school (maybe an MBA?). By working on your career and increasing your income, you’ll be increasing your ability to save and invest in your future.
4. Empower yourself with financial know-how
The sooner you learn to manage your money, the better. Even though you might not know much about personal finance right now, you can always remedy that with books, classes, or even hiring a financial adviser. You’re already here, reading this personal finance article, so you must be on the right track.