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There are many articles about retirement planning written by qualified financial planners and advisors.
But what about the first step in retirement planning? Where should you even begin? And, what do people like you (small business owners, business professionals) have to say in addition to the advice from a financial planner?
We asked hundreds of people the same question: What is the first step in retirement planning? Here are some of the best tips and answers we received to the question.
Create a Retirement Budget
Retirement planning is about determining how much you need to live the life you want. A smart first step in retirement planning is creating a retirement budget. You’ll need to identify the amount of money you’ll have coming in during retirement, how much it will cost to enjoy the retirement you have in mind and the amount of debt you have. The last thing you want is a financial surprise in retirement, and creating a retirement budget is one healthy step to putting a solid plan in place. — Carey Wilbur, Charter Capital
Determine Retirement Age
In order to set yourself up for success, you should start planning for retirement early. By extending your runway, you can start saving money early and investing that money in areas that will make retirement even more comfortable for you. The best place to start is by determining what age you want to retire and how much money you will need each year to maintain your retirement. — Blake Murphey, American Pipeline Solutions
Get Curious
Reading The Richest Man In Babylon at 19 years old inspired me to start thinking about money. Next came books like Think and Grow Rich by Napoleon Hill, I Will Teach You To Be Rich by Ramit Sethi, The Millionaire Next Door, and many more. I think the first step in retirement planning is getting genuinely curious about the topic. Many people will labor over compound interest calculators and investment decisions, but if you can find something that ignites your interest, doing the hard stuff like saving and sacrificing becomes a little easier. — Brett Farmiloe, Markitors
Figure out where you are now
When planning for retirement, figure out where you are now, or your starting point. Far too many people focus solely on the endpoint (their retirement number) without fully examining where they are today. Imagine you’re taking a road trip and want to get to Kansas. How you get there depends a lot on where you’re starting. If you’re starting in New York, the route will be a lot different than if you’re starting in Montana. The same is true with finance. Overspending, not contributing enough to retirement, contributing to the wrong accounts, or paying too much in fees will add unnecessary headwinds to your trip. As uncomfortable as it may be, you need to examine your financial situation with cold objectivity. — James Pollard, The Advisor Coach LLC
Create Five-year Goals
The first step in planning for retirement is determining where you want to be financially once you hit your retirement age.
From there, it’s going to be much easier to work backwards to figure out the steps you need to take to reach your goal. This could include any tax-advantaged strategies, such as contributing a set amount every year to your 401(k), or even simply working at decreasing your spending to increase how much you have left each month to add to your retirement accounts. Setting a final goal also helps you to establish milestone goals along the way. Having a figure to reach in, say, 30 years can seem impossible to attain. But if you break that down into goals you want to reach every five years, then you’ll find yourself much more motivated to achieve these. — Anna Barker, Logical Dollar
Consider your retired lifestyle
First, you have to figure out how much you will need for retirement, and how much you currently have. The difference between the two will guide you on the retirement accounts you need to save into so that you are able to reach your retirement financial goals. When figuring out how much you will need for retirement, factor in your current monthly expenses, and how these are expected to change once you retire. You should also consider your current spending habits, and the lifestyle you want to have once you retire. — Joe Bailey, My Trading Skills
Look into investable assets
A successful retirement will require regular income to cover your required and lifestyle expenses. Once you are certain that your investable assets can generate a guaranteed lifetime income, you are ready to retire. –– Paul Harding, Liquidity Partners
Use online planning Apps
How much money will you need to retire? How much money are you investing for retirement? What is the expected growth of those accounts? Will it suit your needs in the future? Yes, these are a lot of questions. Luckily, there are a plethora of online apps that can help you calculate the totals and help you get started. You’ve got this. It is time to start planning! — Adrienne Collins, Workplace Experience Manager
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