Whether you are just starting in the workforce or are years deep into your career, a common thought lives in the back of most employees’ minds: retiring. When planning for retirement, it’s important to start as early as possible (but better late than never). Here are some things to consider when starting your retirement planning journey and tips for staying on track.
Understand Your Savings Targets
Retirement targets look different to everyone. Everyone’s situation is unique, and your retirement savings targets will depend on many relative factors. This prioritizes your specific goals – whether you want to travel, spend time with your family, pursue a new passion, or even keep working.
To estimate your savings targets, you will first need to consider your current financial standings. Consider your current salary, overall savings, and what your current expenses look like (such as food, utilities, healthcare costs, entertainment, etc.) Then, estimate the yearly income you will need based on your specific retirement goals, creating savings targets to reach in increments throughout your career. By having an in-depth understanding of where you are, you can better plan for where you want to be.
Account For the Big Changes
The tricky thing about planning for retirement is that it must account for any unplanned incidents. Therefore, it’s important to incorporate planning for the big life changes you may experience, as well as the unforeseen circumstances. It’s easy to financially prepare for expected expenses, but retirement planning must include preparation for the “what ifs” because we can’t see into the future.
For example, consider your current healthcare costs and how they may change as you get older. No one wants to be pessimistic, but it’s crucial to account for any medical or personal history that you may endure in the future.
Consider potential changes in your career. For example, do you plan to stop working overall? Will you continue working in a new field or start a new business? Accounting for the potential halt of income or its continuation and using that to contribute to your retirement will allow you to create a plan to achieve your retirement goals based on your current career.
Many other future changes must be accounted for as well, such as property expenses or investments, whether you will be having children, potential support for your family, and more.
Make the Most Out of Your Workplace Retirement Plan
If your employer offers retirement benefits, consider taking full advantage and getting a step ahead in your retirement savings. In this, you can maximize your contributions and employer matching. In doing so, you’re not only consistently contributing to your retirement savings but also potentially paying fewer taxes.
If you are above the age of 50, you can utilize your 401(k) plan to make “catch-up” contributions up to a certain amount to catch up on your retirement contributions if you’ve fallen behind or started saving late. Ultimately, making the most out of your employer’s retirement benefits can allow you to get ahead of your retirement goals.
Work With a Trusted Advisor
There are many approaches that you can take toward building your retirement funds, and each of them is subjective to your current situation, age, and future goals. Working with a financial advisor will ensure that retirement planning is a priority in your long-term financial planning, finding the most efficient manner. With an advisor, you can take stock of your current standings, set specific targets that you can plan to meet in the short term, and review your progress consistently to guarantee you are staying on track.
At Idaho Medical Association Financial Services, our goal is to ensure you achieve yours. We offer fee-only holistic financial and retirement planning services that will work with your circumstance to find the most optimal way to accomplish financial security in the long run.
To learn more about investment opportunities for doctors or schedule a no-cost consultation about contributing to a 401k for doctors, visit our website at Idaho Medical Association Financial Services or call (208)-504-1736.