Early Retirement Planning for Better Financial Results

Written by: Scott Sery

The idea of retiring is at the back of nearly every worker’s mind.  But since for many people it is so far down the road, they have left it at the back of their mind.  By not actively thinking about retirement, they have failed to plan for it.  The thought of retirement planning seems mundane, and too often people end up putting their planning off for far too long.

The best time to plan is actually many years before retirement even seems like an option.  As soon as you start having an earned income, you should open an IRA, or even better a Roth IRA.  Janet Bodnar at Kiplinger talks about opening IRA’s for those who are under 18 years of age.  Working backwards from a desired age of retirement, you can easily figure out how much you need to save each year in order to reach your goals.  The important thing is to start early in order to give your money plenty of time to grow.  It is much easier to let money grow on its own than to hope you will earn more later on.

If you have yet to plan for retirement, now is the time to do it.  Every day waited means you have one less day to accumulate resources.  The process is the same, open an IRA, and figure out how much you need to contribute in order to reach your retirement goals.  Depending on your age, you may not be able to contribute as much to an IRA as you need to.  In that case a non-qualified account, or an employer sponsored plan,  will need to be utilized, and you will be able to load it with as much money as you can in order to reach your goals.  Retirement is still attainable; it just might take more dedication and discipline to get there.

One mistake many people make is thinking that Social Security is taking care of their retirement planning.  For those who are young, there might not be much left to Social Security when they retire.  Regardless of your age, the best thing to do is to plan for your retirement as though it will not be around.  Then if it is available, you will be happy that you get a bonus every month.

The biggest thing to realize is that planning for retirement needs to happen now.  And it has to be re-visited every year.  Be reasonable in your expectations of when you want to retire, if you are in your 30’s and have not started planning, it might not be possible to retire at 50 without some drastic savings strategies.  If you are 18 and making $8/hr, save as much as you can now, so you can let that money grow for as long as possible.  If you have not saved enough in the past, you might need to cut back your lifestyle in order to retire when you desire.  Plan now in order to be happy and comfortable later.


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