I think about retirement a lot, which might be weird since I am in my early 20s. Whenever I tell my friends of my self-employment and early retirement dreams, they tend to think I’m crazy. So why do I think of retirement at such an early age?
My ideal retirement is not where I am no longer working. I want to be in a field that I truly enjoy, and also earn some sort of passive income and something safe on the side so that I can continue to enjoy what I love.
Thinking about retirement now, no matter how young or old you are is very important. However, life never goes as planned, so seeing your retirement plan more as a “guidance” instead of something set in stone is also a good idea.
You never know what might happen. Maybe you always thought that both you and your significant other would work full-time until the age of 65, however, now that you have a young child, one of you has changed your mind and you want to stay home and raise your child(ren).
Something like this can completely change your retirement plan, and you never know how your feelings about certain things will turn out until it actually happens.
I am a big proponent of still enjoying life, while saving and investing for retirement. Living your life now is very important, as your healthiest days are most likely right now instead of later when you are older.
There are numerous things that you should be trying to do to plan for your retirement.
1. Sign Up For a Retirement Plan
Does your work offer a match on your 401K? You better be signed up for it if they do! It’s free money and who wouldn’t want that?
If you start saving for your retirement when you’re young, all of your savings will gain from compounding over time. You know what they always say, $1 today is not equal to $1 a year, 10 years, or 30 years from now.
If you are unsure how to invest or save your money for retirement, consulting a financial planner can always be a good idea. Generally, if you are younger, then you can invest in riskier assets, and as you get older, then you should be rebalancing your portfolio into less risky and more stable investments.
2. Pay Off Debt
Another thing we are constantly striving to do is to pay off our debt. I always hear all of these scary statistics about how people approaching retirement within the next 1 to 5 years still have a very large mortgage.
My goal is to not be one of those people. Having any debts, especially a mortgage, would be very hard to handle when you are in retirement because of limited funds that you will have.
3. Think About Your End Goal
Whatever your age is, it might be hard to fully think about retirement and how you want to spend it. However, having some sort of idea of how much money you should be saving and whether you want to travel constantly, buy an apartment in the city or buy a ranch of 50 acres, is a good idea. Having a an end goal can make your retirement saving more attainable and realistic.
We have thought about how we would want to spend retirement. We would love to be able to have passive income coming in constantly after we both retire from our jobs. We would also like to be able to travel around the world a good amount when we are older, but still want a place to call “home.”
What steps are you taking towards your retirement?