Should I Plan for Retirement? Part 2
“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has” (Proverbs 21:20).
Retirement, as we know it today, is a modern day marvel. There is no mention of retirement in the Bible. However, the scripture is full of wise counsel about preparing for different seasons of life and about saving for the future.
Unless health is an issue, there is no reason for anyone to stop working. Research actually shows that those who continue working past their retirement age live longer! But there is also no guarantee that you health will remain intact or that you will be able to remain as marketable in the future as you are today. Seasons of life happen. Unexpected happens, and God’s word encourages us to financial prepare for those occurrences.
So here are few steps you can start doing today to help you financially prepare for your retirement age.
Do the math
Do you know how much you’ll need to retire? Understanding your future financial needs can give you clarity on what you can start doing today.
- Project your retirement monthly budget. If you know you’ll be debt free, including your mortgage, how much do you think you’ll need to cover your monthly living expenses?
- Go online and search for retirement calculators. Simply plug in few pieces of information and Voila! You’ll have your estimated retirement amount. Divide that amount by the years you have left in the working world and you should get your estimated yearly goal for setting money aside. Don’t be overwhelmed if the number seems larger than life! Use it as a motivator to simply do your best. Something is always better than nothing!
Know your options
There are a few different options for setting retirement funds aside. 401K or 403b are your typical pretax contributions, and will be taxed on the back end when you are ready to start drawing on your retirement funds. Roth IRA is also an option for those who prefer to contribute after-tax money to avoid paying taxes during the retirement years. Whichever option you choose, here are a few ideas to help you start contributing:
- Check if your employer has a matching plan. If they do, consider contributing at least the percentage your employer offers. That way you’ll get double your money.
- Do you think you can’t afford to set aside few dollars a week for retirement? Think twice. Track your spending for 30-60 days and you’ll be surprised what you’ll find. Many of us spend money on lunches, coffee, and other entertainment categories. Simply limiting a few of those expenses will free up some cash that you can put toward retirement. Remember this proverb: “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has” (Proverbs 21:20).
- How about those tax returns? If you receive a refund each year, consider setting aside a portion of your refund for retirement.
Retirement, as we know it today, is a very recent phenomenon. Before the 1900’s most people worked until they were physically unable to continue. Family also played a big role in taking care of the elderly or those unable to work due to health factors. There were no national programs, no employer sponsored plans. None.
So consider all of your options. Do what you can. There is really no magic solution. What it takes is knowing where you are today, where you need to be when you reach retirement age, and having a realistic, doable plan broken down into yearly and monthly goals. The rest is execution.
Today's tip brought to you by Mvelopes and Money4Life Coaching.