Updated: Jul 12, 2021
Are you in your forties? If you are, retirement may be something that you occasionally think about. After all, you have been in the workforce long enough to wish you could stop working, at least once or twice. With the right retirement plan, you may be able to do so a little bit sooner than originally planned.
Of course, retiring a year or two early sounds nice, but it isn’t as easy as you may have thought. The good news is that you are at the right time in your life. The amount of money that you are able to save and put towards retirement in your forties can have a significant impact on when you are able to retire.
You may have been contributing to an Individual Retirement Account (IRA) or have been contributing to your 401(k). You may even invest in individual stocks and bonds. Then there is a good chance that you sat down and set retirement goals for yourself. This may include where you want to live and what activities you want to enjoy. Since your goals may have changed, they should be reexamined. This is important in the event of a retirement cost increase. If the costs of your retirement goals have increased, you need to work on saving more money.
You also need to look at your spending habits and priorities, if your children are getting ready for college. Are you footing the college bills? If so, make sure that you can. As important as it is for your children to get an education, do not go into debt or dip into your retirement savings in order to pay for their education. Instead, examine other avenues of financing, which may include community or local college for two years, student loans, scholarships, grants, and your children working to pay for some of their college education costs.
If you have any debt, now is the time to get rid of it. Request a copy of your credit report. If any bills are marked as unpaid, work on getting them paid off. You cannot comfortably and securely retire if you are in debt. The average consumer debt can be quite high. If yours is high, their is the possibility that you may need five to ten years paying it off. That is why you should start now.
As was previously stated, most individuals start contributing to their 401(k) plans or open an Individual Retirement Account (IRA) in their late twenties or thirties. If this is a step that you have yet to take, please do so. The sooner, the better. On average, experts recommend contributing at least 5% of your income to be put in your 401(k) or Individual Retirement Account (IRA). With that said, if you are just getting started now, at least 10% of your income should be contributed.