The majority of your life will be spent working. The next thirty to forty years of your life will be focused on establishing a career and achieving financial stability. A large part of the reason you work so hard and make a lot of sacrifices is due to the fact you want to be able to have a good life when you retire.
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The meaning of retirement is different for everyone. You may envision yourself relaxing on a beach somewhere sunny or traveling around the world for a couple of years. Others may want to take an early retirement so that they can spend more time with their family and watch their kids grow up. For some, it may mean quitting jobs that are financially rewarding but that do not make them happy and then switching to a profession that fulfills them.
Whatever your retirement plans may be, at the core of all of them is having financial freedom. It means that you can do whatever you want without worrying where the next meal will come from, how you will be paying for your child’s tuition, or how the bills will get paid. Retirement planning is actually part and parcel of career planning because while you are envisioning the future, the work to attain that future begins NOW! The career you choose and the associated financial benefits you get from it will determine if you will be able to achieve your retirement dreams.
So, if you are planning for retirement while you are at the beginning or at the peak of your career, you need to consider these five things.
- Don’t overspend today.
For many of you, the first taste of financial freedom brings about a buying spree. For the first time in your life, you can afford to buy a high-end computer, designer clothing brands, and pricey jewelry. You start paying the full amount on your credit card, and as the months go on you notice that you just pay the minimum because you bought so much that your finances cannot actually cover it.
Not overspending does not mean that you have to save all your money and be miserly like Scrooge. Of course, you should reward yourself for a job well done. Just place a limit for those kinds of purchases and put a chunk of your money into long-term savings.
- Match your retirement plan to your career plan.
Retirement is twenty, maybe thirty years into the future. That’s a long way from now. Forecast what you might require financially in order to retire so you know what you need to do now. Once you know what you require in the future, then you can plan your career around it. For example, to be able to afford a beach house in Florida, you need to be the top sales person in your region by the age of 25, and then be area manager by 30 and so forth. Look for ways to increase your income so that you can meet your retirement goals.
- Structure your debts in accordance to the plan.
When retiring, your goal is to be as debt free as possible. You don’t want to worry about paying for your loan when you have no or a minimal monthly income. That means that your mortgage, your children’s education plans, car loans, credit card balances should be paid off or that they should have a small remaining amount. That would mean that you should plan out your payments. Check with your company or bank if you can customize your payment scheme.
- Negotiate for a good 401(k) plan.
Companies also contribute to your 401(k) plan. When getting a job offer, ask about company contribution to your retirement fund and know what the maximum is. If possible, instead of fighting over the difference in salary, ask them to increase their contribution to your 401(k) plan. Aside from that, also negotiate for a good benefit package. Things like a clothing allowance, free meals and telecommuting on some days would help cut your expenses and allow you to sock it all away in your retirement plan.
- Invest in training that you can use for the future.
Many companies have continuing education benefits. You get a few hundred dollars to spend on some classes. While some of them have to be used for updating skills so that you can be promoted, you should also take a look at skills that have to potential to bring in income. Taking a foreign language course, for example, might allow you to tutor or translate. You can learn about bonsai or some form of art so that you can sell it.
When it comes to planning for your future you want to be prepared. What do you need to do before you retire? Do you have specific goals?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.