The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
When you are in your 30’s and 40’s will you have control over your finances? If you do not take the steps now to plan for your future and your retirement, you will find that you are struggling to pay down debt and are not able to save money for later on in life.
You can avoid the consequences and better prepare for the uncertainties ahead by putting money away each month from your paycheck, even if it is a small amount. Over time this money will grow and give you a cushion when you reach retirement age.
In your 30’s try to build up an emergency fund that will cover between six and 12 months of expenses so that you do not need to tap into your savings if things like car repairs come up.
See more financial tips that will help you on the path to retirement by reading the infographic provided below.
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The Path to Retirement
in your 20s
Save a Little. Save Often.
Make saving a little from each paycheck a habit.
Explore Corporate Retirement Benefits
The number of businesses with a 401(k) grows by 25% each year
Get Rid of Credit Card Debt
¼ of people 50 and older say they’ve used retirement accounts to pay down credit cards in the past year
Put Additional Savings Into the Roth IRA
Unlike a 401(k), Roth IRA withdrawals are 100% tax-free, if you are older than 59 and a half and opened the account more than 5 years ago.
in your 30s
Have 1.5 – 2 times your annual salary put away when you near the end of your 30s.
Save money in retirement-focused accounts.
Avoid tapping into your savings by having an emergency fund that covers 6 – 12 months of expenses.
in your 40s
Make Retirement Savings Your Top Goal
Remember every dollar you fail to put aside now could mean $10 less in retirement income.
Smart College Strategies
Be careful not to take on more debt than you can easily repay for your child’s education.
Pay Off Credit Cards
Credit card balances of any amount are a sign of trouble.
in your 50s
Refinance Your Home With a 15-year Mortgage
so you’ll be debt-free by 70.
Save like Crazy
if you save $10,000 per year at 6% x 15 years = $230,000
$10,000 – $15,000 annual lifetime retirement income
Develop Your Support Network
Get closer – geograhically and emotionally – to your children and other relatives.
in your 60s
Start Your Social Security Benefits at Age 70
Waiting until then maximizes your lifetime income.
Check Your Withdrawal Rate
Many financial planners feel you shouldn’t withdraw more than 3% to 4% of your retirement savings the first year.
Pick a Retirement Date
Work Until Age 70
Consider Long-Term-Care Insurance
Figure Out Where You’re Going to Live Once You Retire
Don’t Forget To Include Medial Costs
Review Your Estate Plans
Make sure you have updated durable powers of attorney for finances and for health care.
Consider an Immediate Annuity
An insurance product that promises you a lifetime stream of income in exchange for a lump-sum investment.
About the Author
Written by KDK Accountancy Corporation, an Orlando CPA offering comprehensive accounting services to Orlando businesses and individuals.