Many young professionals feel they’re already savvy with money management if they avoid credit card debt and pay every bill on-time. While these are great financial habits to establish early on, it’s never too early to start planning for retirement. At Ivy Ridge Asset Management, we’ve helped hundreds of New York residents successfully map out their retirement plans. While there are a variety of things you can do to get a head-start on your retirement planning, below are five things you should focus on in the beginning stages of retirement planning.
Setting A Retirement Goal
Before meeting with a financial planner to discuss your retirement plans, choose an ideal number you’d like to have in your portfolio on your big retirement day. For many young professionals, this can be an intimidating step, since retirement seems so far away. However, there are ways you can approximate this.
One retirement strategy advocates that young professionals aim to replace seventy to eighty-five percent of their working income. In this scenario, the seventy to eighty-five percent is supposed to represent how much money you’re currently spending to maintain your lifestyle. In theory, the remaining fifteen to thirty percent of your money is being put towards other expenses you won’t need during retirement, such as commuting costs and work clothing. Once you retire, seventy to eighty-five percent of your working income should be enough to allow you to live the lifestyle you are currently enjoying.
Live Below Your Means
Many financial advisors tell young professionals to live within their means when it comes to their personal finances. While this is a great way to stay out of debt, it will not be beneficial when it comes to building wealth and funding for your retirement. Rather than just getting by every month, try to love below your means so you can slowly start to build up savings.
Cover Your Bases
A crucial part of retirement planning is protecting yourself and your family from the unexpected. This means investing in sufficient health insurance and life insurance is very important, even if the premiums make you cringe. Without proper healthcare and life insurance coverage, unexpected accidents such as illnesses and death can completely obliterate your retirement fund in the blink of an eye.
Automate Your Savings
With the incredible advances in modern technology, it seems like everything is automated these days. If your paychecks are already automatically deposited into your bank account, why not start automating savings as well? Contact your bank to learn how you can set up automatic transfers between your checking and savings account so you never have to worry about shuffling money between your bank accounts again.
Take Advantage Of Employer Matching Programs
If your current workplace offers an employer matching program, make sure to take full advantage of it. Most employers offer retirement matching to help you save for retirement by matching up to a certain percentage of your salary. For example, many companies in the United States offer a fifty percent match of up to six percent of your contributions. This means if you contribute six dollars of every one hundreds dollars you make, your employer will contribute three dollars to your retirement plan.
Ivy Ridge Asset Management is proud to provide a variety of financial planning and advisory services throughout New York. Since 2004, we’ve helped hundreds of New Yorkers optimize their finances through a variety of proven financial techniques. We specialize in investment and risk management, retirement planning, tax planning, social security optimization and more. Contact our financial planners in Rhinebeck today to learn how we can help grow your wealth and save for the future!