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| Retirement is a reality everyone needs to face at some point, even for young adults who are just starting their careers. Planning for your golden years is important to maintain your lifestyle and keep a comfortable standard of living despite no longer having any active income. However, most Americans close to retirement age have just $120,000 in retirement savings — that’s 12% of the recommended $1 million, and even that amount doesn’t stretch as far as it used to. Thus, having a retirement plan should be a fundamental part of your financial planning.
A key thing to note here is that it’s never too early or too late to start your retirement plan. There are strategies for all ages, from when you’re a young adult to your mid-50s. In fact, a feature article by Marcus on retirement savings outlines the different steps to take in the decades between your adolescence and your senior years, as a little bit saved throughout the years can easily add up in interest. Of course, starting early is still a great idea — but because it seems like a daunting task, too many of us tend to put it off for other important life decisions, such as buying a house or paying for your kid’s college education.
Fortunately, having and following a retirement plan only takes a little patience and discipline. Here are some ways you can make sure your retirement plan is effective:
A key thing to note here is that it’s never too early or too late to start your retirement plan. There are strategies for all ages, from when you’re a young adult to your mid-50s. In fact, a feature article by Marcus on retirement savings outlines the different steps to take in the decades between your adolescence and your senior years, as a little bit saved throughout the years can easily add up in interest. Of course, starting early is still a great idea — but because it seems like a daunting task, too many of us tend to put it off for other important life decisions, such as buying a house or paying for your kid’s college education.
Fortunately, having and following a retirement plan only takes a little patience and discipline. Here are some ways you can make sure your retirement plan is effective:
Have a number in mind

This is, perhaps, the most daunting task, but having a picture of what retirement will look like is vital, as there is no one-size-fits-all method to planning. Everyone has different goals and lifestyles, and our writer Sonja Wright explains that a budget is what determines how much you’ll need to live comfortably over the years. Start by figuring out when you want to retire. It can be as reasonably early or as late as you want, but remember that this will decide how much you'll need save. If you want to retire early, you’ll have to save a lot more than someone who will retire later on.
Once you’ve decided on your retirement age, calculate how much you’ll spend each month, and get the annual cost. This is how much you should have for a significant number of years after you retire. For instance, if you expect to retire at 65 and spend $50,000 per year, then you should have at least $750,000 to cover yourself for the next 10 years after retirement.
Once you’ve decided on your retirement age, calculate how much you’ll spend each month, and get the annual cost. This is how much you should have for a significant number of years after you retire. For instance, if you expect to retire at 65 and spend $50,000 per year, then you should have at least $750,000 to cover yourself for the next 10 years after retirement.
Maintain multiple sources of passive income
It goes without saying that when you’re retired, you’ll no longer have a source of active income — but it doesn’t mean you shouldn’t have sources of money. Advisers at Penny Hoarder explain that having passive income sets you up for more financial security and freedom, and although this still requires some form of maintenance, it is typically easier to manage.
There are plenty of types of passive income to consider: investing in stocks, starting a business, crowdfunding real estate, and even blogging. It’s worth noting that having investments is the only way to outpace inflation, so your $100 today can still have the same purchasing power 10 years from now through your investments.
There are plenty of types of passive income to consider: investing in stocks, starting a business, crowdfunding real estate, and even blogging. It’s worth noting that having investments is the only way to outpace inflation, so your $100 today can still have the same purchasing power 10 years from now through your investments.
Automate your retirement plan
Automating your retirement plan is one of the best choices you can make. Not only does this ensure that you’re contributing monthly, but it also keeps your money hands-off. Register for a 401(k) plan if possible, and contribute the maximum to that each month. If you don’t have one, contact your bank and ask them to automatically transfer a certain sum to your retirement savings account each month.
Create a safety net
Life happens, and as you get older, health complications may end up getting in the way. Before your retirement, it’s important to have emergency funds stashed away in both savings and in investments. This is money that you are absolutely not allowed to touch unless it’s a serious emergency, regardless of whether or not you’re retired yet.
The general rule of thumb is to make sure that you have at least 3 months’ worth of living expenses saved up — so if you’re currently spending $35,000 each month, you should have $105,000 in your emergency stash on top of some investments you can’t touch.
The general rule of thumb is to make sure that you have at least 3 months’ worth of living expenses saved up — so if you’re currently spending $35,000 each month, you should have $105,000 in your emergency stash on top of some investments you can’t touch.
Protect your assets

Retirement planning isn’t just about getting enough money for the future — it also entails making sure your assets are protected. This can come in many forms, such as creating a will, having insurance, or creating trust funds. This will ensure that when you pass, your assets can go directly to whoever you designate it to.
What does your retirement plan look like today?
Retirement planning requires a lot of discipline and commitment, but the payoff is definitely worth it. Take note that there is no single way that everyone can plan for their retirement, and that these tips are merely here to guide you along to a more secure future.
However, no matter how or where you start, the most important thing is to begin today. At 20, 40, or even 60, set your goal, and start small — soon enough, you’ll find yourself living comfortably and stress-free in retirement.
However, no matter how or where you start, the most important thing is to begin today. At 20, 40, or even 60, set your goal, and start small — soon enough, you’ll find yourself living comfortably and stress-free in retirement.
About the Author
Amanda Greene is a financial advisor based in Charlotte, North Carolina. Formerly from the Big Apple, she moved to Charlotte for a less hectic life and to focus on raising her two sons. When she isn't working, she's sipping on wine and listening to mystery murder podcasts in her kitchen, or cycling around colorful neighborhoods.