When you’re planning for retirement, one of the hardest parts is often getting started. You may not be sure which direction to take, how much to save, or where your money should be invested. Fortunately, there are ways to figure everything out, so you can have the best plan for your retirement savings. Here are three steps to get you started on the process.
1. Know Your Needs And Goals
Before you start planning for retirement you need to know where you’re aiming. It’s different when you start at 25 as opposed to 35, or when you start saving at 18 versus not having anything saved up when you turn 50. Naturally, the best plan for retirement is one that gets you started early and helps you save up plenty of money, so you don’t have to worry.
But that’s not always easy, and there are times when other areas and aspects of life just get in the way. No matter where you’re starting from, don’t be discouraged. Unless you’re already well into retirement age, you can still save up money and have some retirement savings. That will help provide you with future security and reduce your financial worries, too.
You can calculate where you are versus where you want to be, and take a look at how much you’d have to save in order to get to your goal. If your goal simply isn’t attainable it’s better to find that out as soon as possible. Then you can choose a different goal and make some adjustments to your retirement plans, so you can still have a retirement you feel good about.
2. Make A Plan, And Stick To It
When you create a personal finance plan for your retirement years, sticking with it matters. Consistency is extremely important, and one of the biggest issues for a lot of people. It’s natural and very human to want to spend money instead of saving it, especially if you don’t have a lot. But finding the right balance that lets you save for retirement is vital so you can have some security in your later years.
The creation of a plan is often done with a financial advisor who can help you determine whether your goals are realistic and how you can meet them more easily. Deciding where to invest your money and how much risk you want to take both matter. If you have higher-risk investments, especially when you’re younger, you may be able to save up more than you think in a short period of time.
3. Keep Your Portfolio Strong And Diversified
When you plan for retirement you want to spread your investments around a little. That way, if something happens to one of them, you’ll still have strong savings in the others. There are two different ways you can diversify. One is through the purchase of mutual funds that are already diversified for you. The other is through choosing your own diversification options.
For example, you may buy some bonds, invest in some stocks, and purchase some real estate. You could flip houses and put the profits into a mutual fund, or become a landlord. There are all kinds of ways to grow a portfolio, and how you handle yours is up to you. As long as you’re reducing your risk as you get closer to retirement, and you’re on track with your savings, there are no limits to the ways you choose to save or invest.
Remember, the best plan for retirement is the one you can stick with comfortably, and that keeps you on track and gets you closer to your goals.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author.
He's been featured on Forbes, The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.
He loves to share his personal finance tips and money management wisdom with others on his website, ShawnManaher.com, to help them find financial freedom.