- Calculate how much money you’ll potentially need in retirement, taking into account your future income and expenses. Consider how inflation can impact the value of your savings. For example, three percent inflation over 24 years would cut the purchasing power of your dollars in half..
- Take maximum advantage of pre-tax contributions to your employer’s retirement savings plan and other tax-advantaged savings options, like an IRA.
- Pay down debt. The older you get, the less debt you want to have because in retirement you’ll most likely have less income to cover debts. Aim to retire debt-free for maximum flexibility.
- Factor in health care costs. Health care is one of the largest expenses in retirement and it can pinch into your savings, even if you are healthy. “At age 80, people in healthy households have a remaining life expectancy that is 29 percent longer than people in unhealthy households, and, therefore, are at risk of incurring health care costs over more years,” according to a report by the Center for Retirement Research at Boston College.
- Look into guaranteed income streams that can be stretched over your retirement years, no matter how long you live. Speak with your financial advisor to choose the right option for you.
- Keep up with Social Security’s rules. If applicable, the age at which you choose to retire could have a negative or positive impact on the benefits you receive. Younger individuals should prepare for the possibility that Congress pushes back the age at which you can begin benefits.
- Consult with your financial advisor. This is always a good move, especially as you sort out your savings strategies and retirement goals.
After weighing all of these factors, perhaps a better question to ask yourself is “Have I planned (well) to retire ‘young’?”