It’s Never Too Early to Save for Retirement – The Denver Post
Whether your retirement dreams involve a cozy mountain cabin, or jet-setting around Europe, all of them have one thing in common: planning. More than just dollars and cents, planning for retirement means creating a clear picture of what life after work looks like to you, and developing a reasonable plan to get you there. Alexandra Swanson, a Financial Advisor with CUSO Financial Services, LP* located at Bellco Credit Union, shares her tips, tricks, and unique perspective on retirement that can help you make those dreams come true.
Find Your Vision for Retirement
The first step, and maybe most important, is knowing what your dream retirement looks like and setting goals for your future. This is critical to helping you and your Financial Advisor get a plan in motion. It also helps you reframe how you think about saving. The extra $20 you put into your IRA this month isn’t just $20–it’s a brick in your retirement beach house or extra rigging for your houseboat. Thinking about retirement savings as pieces of your dream can keep you focused in ways that thinking about it in dollars and cents simply can’t. As Swanson likes to tell her clients, “every dollar that we save or spend is a decision to save for tomorrow or live for today.”
“There’s never a better time to start saving than today,” Swanson says. “That’s true if you’re 20 years old or 65 years old.” For younger savers, starting now means more time for your savings to potentially grow, whether it’s through compound interest, asset growth, or dividend reinvestment. If you’re approaching retirement, starting now can mean building savings in case of emergencies. A particularly useful tip that Swanson gives her clients nearing retirement age, is to live on the income they expect to be getting in retirement and save the rest. “If budgeting to that number feels like it’s just not enough, they may decide to continue to work for a little bit longer.”
Make Sure You’re Taking the Free Money (If Your Employer Offers It)
Many employers, especially large companies, offer a 401(k) contribution match. If yours does, and you’re putting money into the plan, try to chip in at least as much as your employer is willing to match. For example, if you’re contributing 4% and your employer will match 5%, adjust your contribution when you’re able to. You likely won’t notice a 1% difference in your paycheck, but your retirement account will, especially if it’s a long way off.
Find Every Way to Save
If your employer doesn’t offer a 401(k) plan, or if they do and you’re already contributing, there are additional ways to give your retirement savings a serious boost. Consider putting some money into an IRA, or Individual Retirement Account. You have the choice of a traditional IRA or Roth IRA, and deciding which is best for you is generally based on the amount of time you have before retirement, your current income, and your projected income in retirement. As with most decisions, determining what’s best is largely based on your specific situation. Which brings us to the next tip.
Talk to a Professional
Set aside time to reach out to a professional Financial Advisor. They can help you identify savings opportunities that are right for you in both the short and long term, and can make sure you’re on track for your retirement dreams. “We like to be as comprehensive as possible,” Swanson says. “We start by talking about what retirement means to you…once we define the goals, we can look at the financial components that are going to help you reach those goals.” A Financial Advisor will also help you determine how much you should ideally be putting aside for your specific retirement goals–you do not have to figure it out alone!
Paying Off Debt vs. Saving for Retirement?
Whether you’re already saving for retirement or are just getting started, it’s important to know where your paycheck goes. Part of that also means paying off debt. It could be a car loan, student loan, a mortgage, or credit card–no matter where it’s coming from, prioritizing debt payments are an important consideration for savers. But how do you know how much of your check should be going to debt, and how much should go to retirement savings? Swanson knows this can be a challenge, but it doesn’t have to get in your way. “This can be a very complicated question and depends a lot on the interest rate, your goals, your cash flow, and when the debt will be paid off. I will say that you don’t have to do one exclusively over the other, you can certainly split extra income you have each month and do a little of both.”
As with all of these tips, talking with your Financial Advisor can help you determine what the best path is for you. It’s never too late to start saving for the retirement you dream of, and having someone help you get there will make the process that much easier! As Swanson says, “Just start! Any monthly savings amount that fits into your budget is a great way to begin!”
*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Bellco Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
The news and editorial staffs of The Denver Post had no role in this post’s preparation.
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