Are you too young to plan for your retirement?

Many persons who are under 40 years old have not yet begun planning for retirement. However, is there such a thing as “too young to plan for retirement?” Does “the early bird catch the worm? The earlier you start to plan for retirement the more prepared and at ease you will ultimately be. Here are some helpful tips to help you grow your financial wealth and ensure that your retirement years will be well cushioned.

1. Save as much as you can, as early as you can.

The sooner you start to save for retirement the better it will be for you! If you begin the saving habit when you are young it is a positive habit that you don’t often outgrow.

2. Set realistic financial goals.

Project your retirement expenses based on your needs. Envision your ideal retirement life and then determine how much that life will cost.

3. Determine your asset allocation mix.

After determining your long term goals and taking into account your risk tolerance, you need to determine your asset mix. Your long term returns will vary based on what proportion of your assets you will invest in various financial instruments.

4. Use instruments that can give your savings a tax deferral advantage.

During your working years, you can use a deferred annuity to accumulate assets. These plans allow you to accrue substantial funds that will provide a guaranteed pension at your retirement along with substantial tax savings.

5. Participate in a company contributory pension plan.

Contributing money to a pension plan at your work place which gives a matching contribution from your employers is an excellent way to begin preparing for retirement.

6. Draw down on your nest egg.

If you are in good health when you retire, you can draw down on your money which you expect to last you for many years. You should access money from taxable accounts first and let the interest on tax-deferred accounts compound for as long as possible.

7. Cater for medical expenses.

When catering for retirement you should take into account saving to cover medical expenses which sometimes increase as you get older. Don’t let your nest egg disappear in medical bills.

8. Make the most out of retirement assets.

By the time you are ready to retire you should be in a financially healthy position whereby you would have owned your home free from any mortgage. You can opt for a smaller home with less maintenance costs. If you choose to stay in a larger home, you can consider leasing out part of it to obtain an additional income which can sustain your needs. Be creative!

9. Retired – but working part-time.

Working after you have retired reduces the amount of money that you have to draw down on from your nest egg. Remember however that most retirees do not command the salary that they earned when they were in their prime.

Remember, no one else is responsible for planning your financial future BUT YOU!