As millennials, retirement is probably the last thing on your mind. After all, you’ve got so much to accomplish such as paying off your loans, starting or building your own career or business.
At this point, it also includes your goals for traveling, your goal to buy a house, or starting your own family. You have your hands full. Juggling your weekly plans, let alone planning your life 30 to 40 years from now is a serious task.
But thinking about retirement as early as now can have its benefits. If you start visualizing your life in retirement, you are able to know how much money you will need to live a substantial and relaxed retirement life.
So to help you plan carefully, let us bring you the millennial’s guide to retirement planning to make sure your hard-earned money won’t just slip away.
1. Pay off your debts
Most of us have debts. There is no shame in that. But sometimes, it can feel like a heavy burden preventing you from living a life with financial freedom. Now is the time to get rid of your debts. Strategically pay your debts by paying more than the minimum of each month. It is like reverse-engineering the compound interest and making it work in your favor. Your debt slowly goes away when you do this type of payment.
Another most effective way to be more strategic in paying off your loan to a licensed money lender is to set up an automated payment. As your loan fades way, you will have more money available to save for your retirement or that trip to Bali.
2. Build an emergency fund
Sometimes life does not go exactly as planned, you have to be ready. An emergency fund is your safety net just in case life gets unpredictable. Being laid off, getting into a car accident, or a sudden health scare – these things can easily put a dent on your savings. You often make a great plan on how to achieve your goals and invest your time, energy, and money to fulfill them.
But any emergency that comes can have a massive impact on your perfect plan unless you have separate funds to use in these emergencies. You can get life insurance while you are young and single. This can be beneficial when you get married and have a family. It gives your family protection if something sudden happens to you.
3. Set your priorities straight
You are planning to retire by the age of 55 and you have the perfect plan on how to do it. But you also like a new car at the dealership that you saw the other day. Do you think buying a car now can have an impact on your plan to retire at 55 years old?
When the time comes that you feel torn on which to prioritize, you must assess your spending habits and your vision of retirement life. If retiring early is much more important to you, you may want to cut back on some expenses to make way for your bigger dream to turn into reality.
4. Collaborate with financial advisors
Now you have crafted your early retirement plan, you may think you are all set to turn it into reality. The real challenge is how to manage your finances once you reach retirement life. Consult with financial advisors to help you create a specific financial plan for you and your family. Financial advisors can also guide you on where to invest your money and make it grow for you to achieve financial freedom.
5. Invest in passive income
Passive income gives you more time freedom. As you reach the retirement stage, it is evident that you don’t plan to work more. But how do you live substantially without draining your savings? The solution is investing in a passive income. Investing in a passive income allows you to live your life pursuing your passion without having to worry about how you can pay the bills. Stability and growth are what you aim for in your retirement years.
Enjoy the present.
With all the financial planning for your early retirement, it can be overwhelming. Don’t forget to enjoy the present. Live in the now but still plan for the future. When you set aside funds for your early retirement, don’t forget to spend money on what makes you happy such as spending time with family by going on trips or simply going to movies and eating at your favorite restaurant. Remember, you can still be responsible but still fun.