According to research, a majority of Americans are not financially prepared for retirement. By taking a few small steps today such as budgeting and saving early, you will be better prepared when the time comes to retire.
Budgeting and Planning
One of the first steps you can take to achieving a financially secure retirement is to plan and budget. A common obstacle to planning is identifying the amount of money you will need in retirement. To help overcome this obstacle, think of retirement savings as income replacement. You should assume that you’ll need 80% of your annual income in retirement. This may allow you to maintain close to your current standard of living in retirement.
Alongside long-term planning, you should continue to track your preparedness for retirement. MERS can help! We provide you with an annual Snapshot Report and access to the Full Picture report builder to help you assess and adjust your level of retirement readiness.
Saving early and consistently are also important components of retirement planning. Saving for retirement early in your career carries the advantage of compounding.
Think of retirement savings as a snowball rolling down a hill. The earlier the snowball starts rolling, the longer it rolls, growing in pace and size. With compounding, the reinvestment of earnings generates further earnings. So, the earlier and longer you save, the more you can enjoy the growth benefit of compound savings.
Putting it Together
To better prepare for retirement, your best course of action is to plan and save early. Although retirement may seem distant, taking steps today, no matter how small, can carry long-lasting benefits.