Retirement Planning 101- What to do at 35 if you Haven’t Started Saving for Retirement

It is easy to go through your early adult years without concern for retirement. During those years, you are young and carefree, and you think you have plenty of time to plan for retirement later. Also, while trying to get yourself established, some feel there is no money left over to save for retirement. However, time has a way of creeping up on you, and before you know it, you are 35 and haven’t saved a dime for retirement.

It is easy to stress out when your friends are talking about how their retirement funds are allocated, and you don’t have any funds to allocate. At 35, you may be getting a later start than some, but you still have three decades to save. With the right retirement plan in place, you can still have a wonderful retirement without financial worry.

Develop a Plan

Before you start throwing money haphazardly around, it is best to develop a sound retirement plan. You can read a dozen different experts’ advice regarding their idea of what the best retirement plan is, and it actually may benefit you to read the logic behind each one. However, each person is unique and will have individual goals and objectives. After reading the logic behind different retirement planning strategies, develop your own investment plan. Establish a target goal and estimated year of retirement. Then, determine what it will take for you to reach your goal.

Improve Your Financial Situation

One aspect of developing your retirement plan involves preparing an estimated budget for yourself three decades from now. That can be difficult because you may not know exactly what your housing situation will be like or even how much a loaf of bread will cost. The best you can do is estimate and make adjustments for inflation. However, one firm step that you can take is to improve your financial situation. Adjust your current budget and spending habits to allow for greater savings and retirement contributions. Plan for more modest and affordable vacations so that you can pay off some debts. When you retire debt-free, you need much less cash to live on.

Max Out Your Registered Retirement Saving Plan

If you are one of the many millions of adults who work for an employer with an employer-matching RRSP program, RUN, do not walk to your HR department today and take advantage of that program. Whether your employer matches 50 cents on the dollar, dollar for dollar up to three percent of your income or something else, this is essentially free retirement money, so don’t leave it on the table!

Explore Other Avenues for Savings

Once you have fully taken advantage of the employer-matching RRSP program available to you, consider investing any additional money you have left over for retirement in a TFSA. Even if you can only save $500 per year into this account right now, every little bit helps. The benefit of compounding interest over time will grow your money over the next few decades. If you have maxed out your TFSA, you can consider investing money into a non-retirement stock account, in real estate or in another investment vehicle.

Invest Aggressively

Many adults are confused about whether to invest aggressively in their thirties. Many experts recommend that you allocate up to 80 or 90 percent of your retirement funds into aggressive stocks. Your comfort level will dictate your exact allocation. However, with approximately three decades until retirement, an aggressive growth plan is ideal for most.

Use Raises Wisely

Once you have developed and established a retirement plan, you can sit back and let automatic bank drafts, dividend reinvestment programs and other automated investment features do their work. However, looking forward, you do want to take steps to increase savings and retirement contributions over time. When you pay debts off, use the additional money as retirement contributions. When you get raises, bump up your retirement savings rather than adjust your lifestyle. If you can live on a paycheck of your current size comfortably now, you can continue to do so for the next few years while you use your raises to supplement your retirement efforts.

It can be unnerving to come to the realization that you are 35 years old and have not yet started saving for retirement. However, you can quickly change that by following these tips. By getting started today, you will be well on your way to funding a great retirement portfolio. Compound interest is key to your success, so start today. Every dollar you put away now will be worth substantially more than a dollar saved 30 years from now due to compound interest.

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