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Start Young With Financial Planning for Retirement
When you’re in your 20s or 30s serving in the military, retirement seems a long way off, considering that full retirement age is 66 according to AARP. With the average life expectancy at around 80 years, it may seem like retirement planning isn’t necessary yet. However, your 20s and 30s are the ideal time to prioritize financial planning for retirement, and the following tips presented by the Danna & Associates, PC can make it easy.
Start Saving Early
Although you may want to have fun with your money when you’re young, you should create a budget early and adhere to it. While it’s okay to splurge occasionally, you need to start saving as much as possible at a young age. This takes discipline, a trait that you certainly picked up during your service to the country.
When you spend most of what’s coming in and have no savings, you could find yourself in financial predicaments without a nest egg to fall back on when unexpected expenses arise.
Once you determine how much money you have after paying your routine expenses, figure out a reasonable amount you want to save each month. For instance, putting $200 a month into a mutual fund starting in your 20s could earn you over $300,000 by retirement age. This will come in handy when it’s time to retire, especially if you’ll have the need for living in a skilled nursing facility.
Take advantage of employee benefits that will help with estate planning. For example, many employers offer 401(k) retirement plans, pension plans, life insurance, and/or stock options. You should talk with your boss or HR department to learn what you’re eligible for and additional perks your employer offers, such as 401(k) matching, discounted stock purchase programs, or life insurance for dependents.
Learn to Forgo Unnecessary Expenses
As you budget, learn how to separate your needs from your wants. Find ways to eliminate unnecessary expenses whenever you can. What may seem like only a minor amount of cash can accumulate. You could save money by not buying a daily latte. If you’re buying one latte at $3 every workday, you’re spending $15 per week or $780 per year. If you’re purchasing one every day, Nationwide points out that you could save over $1,000.
Avoid Debt Whenever Possible
You might see a $2,000 bedroom set and want it now. It may seem tempting to charge it, but you’re going to pay interest on that amount. Therefore, you could find yourself spending quite a bit extra to get that bedroom suite.
Instead, you should charge only what you can pay off immediately. Save your money and purchase other items you want when you can afford them.
Estate Plan Early and Update Often
When you’re young, you may feel you don’t have much of an estate to plan. And you may feel like you have a long time to address what you’d do if you become unable to take care of yourself. However, it’s never too early to start planning for the unexpected. Additionally, as your desires change and your estate grows, you should continuously update your plan. Consult with Danna & Associates about your estate planning to make sure you’re on track.
Consider Buying a Home
While renting has its benefits, such as fewer responsibilities, buying a home is an investment that can grow in property value, depending on how much you spend and the economic climate. As a veteran, you can always get a VA loan to buy a home. However, before you make a purchase, it’s important to learn the real value of any home you’re considering. Luckily, you can find calculators online that determine a home’s true value to help you decide if the investment is worth it.
Planning for the Future Means Starting Early
When it seems like you have plenty of time, it’s easy to put off saving. Ideally, you should start saving and budgeting for retirement in your 20s or 30s, and carefully choose what you spend your hard-earned cash on.