Never Too Early

Thinking About Retirement Planning and How To Start At Any Age

There are all kinds of retirement clients at McDowell. Some arrive after they’ve retired, concerned that their retirement isn’t going quite as they’d planned. Others come to us just before retirement, or shy of it a few years, looking to put the finishing touches on wrapping up their careers and making some big moves before their earning days are no longer needed. Some are at the very beginning of their retirement planning, with long roads ahead, but hoping to maximize their diligence and capitalize on the many ways that modern retirement planning can be accomplished.

None of these people, whether the post-retirees or the young and burgeoning, are late to the game. While there are, of course, more moves afforded to the early adopters, even those at or near retirement have choices. The vital thing to know is what to focus on depending on what category you fall into. Spring chickens should not be making the same moves as near-retirees and vice versa.

Below are a few ideas for maximizing your retirement planning based on age and career stage.

Investment Planning: 30-45

The primetime to begin working toward some long-term financial goals, your 30’s and early 40’s are all about setting the tone for your financial future. You’ve potentially begun to narrow down a career in a field you enjoy and are looking forward to the exciting combination of work and reward that the next decades will bring. 

Some ways to start the retirement ball rolling:

• Take your company’s 401k or 403b and utilize the full company match (if applicable). 
  These retirement savings plans are often the bedrock of long-term plans, and matching your company’s contribution is like saying “yes” to free money. While it might seem painful to match your company’s percentage today, in 30 years, when you’re ready to retire and that money has compounded many times over, you’ll be thanking your younger self.
• Learn to budget.
  We get it; budgets are not that fun. But your days of financial security won’t indeed be at hand till you’re ready to stick to living within your means and letting that money you’ve worked so hard to earn do more for you than just buy a cool new toy or another round of drinks. Factoring fun into your budget is an essential part of the process, but a budget is like a plan, and there are few successful retirements without both budgets and plans. Bite the bullet early.
• Find a financial planner you trust
  Managing your money and investment opportunities might not seem too complicated now. But when your earnings go up, and you have multiple accounts and investments that you’re trying to watch while also working and spending time with friends and family, WHILE also working on that novel you keep putting off, WHILE trying to train for that half marathon…

You get what we’re saying. Life has a lot of spinning plates, even for the young. Make your life easier and invest in a relationship with a financial professional that you trust, have good communication with, and want to partner with.

Investment Planning: 45-60

 You made it to the second half of your career – you’re a senior member of the team or a specialist or something denoting your years of labor in a particular field. With that comes a lot of the rewards befitting your tenure: better pay, or perhaps even the chance to strike out on your own and create something for yourself. Maybe you’ve inherited the family business or started one of your very own.

Regardless, the financial challenges (both present and future-oriented) are different than the ones even ten years ago.

Here are some things to keep an eye on:

• Use taxes to your advantage  
  Those over the age of 50 are allowed to increase contributions to traditional and Roth IRAs as of 2021. The federal government also allows those over 50 to contribute another $6,500 to your employer-sponsored retirement plan. Your 50’s never looked so good on you.
• Keep money outside of retirement accounts
  Having money in your retirement accounts is an important step. However, this alone will probably not afford you enough to retire on. Without cash in other accounts, such as a brokerage account, most people have to cut expenses once they retire – nothing something you want to be doing once you’ve reached an age where you’re more able than ever to enjoy the fruits of your labor.
• Pay off debts
  While you shouldn’t necessarily be too concerned with paying the mortgage of your house just yet, other debts (school loans, cars, credit cards) can become heavy once you move into later life—our advice: continue to work at trimming those debts down. The less debt you have moving into the later part of your career, the more you can set aside and have grown when you retire.

Investment Planning: 60+

Congratulations – you’ve made it to retirement age! Along with the respect of those in the working world, you’ve earned the right to take a deep breath, relax, and step into the next phase of your life.

Just a few last tips to get you over the finish line and beyond: 

• Weigh your options before retirement 
  While 65 is the commonly accepted benchmark for retirement, many people are not financially or psychologically ready to retire at 65. If this is you, it might be worth approaching your employer and seeing if staying on longer might be for you. Incidentally, many companies will hire a senior staff member as a consultant to provide leadership and direction but not have to bear all the brunt of responsibility.
• Choose when to draw Social Security 
  Anyone considering retirement should be factoring Social Security into their decision. One element of choosing when to retire is the receiving of full or reduced benefits, based on the year of your birth in relation to 1937. In other words, if you were born in 1937 or before, the age you would receive full benefits is 65. If you were born in 1938, you would need to be 65 and 2 months. 1939 = 65 + 4 months. And so on. Someone born in the 1960s would need to retire at 67 to receive full Social Security benefits.
• Enroll in Medicare 
  Available to those who are 65 and older, Medicare can help cover the cost of health treatment, especially once a health plan at work no longer protects you. Medical expenses are costly and can be a severe drain on your financial holdings. Medicare and other long-term health care options can keep the bulk of your wealth intact as you near or enter retirement.

• End where you started – working with a financial planner
  The complexities of wealth management, especially as you near retirement or are already in retirement, are no joke. And all the internet and anecdotal advice in the world will not equal a tailor-fit plan for your financial, professional, and retirement goals. Because of all the intricacies, having a financial planner who can create a plan that grows and changes along with you is immensely important. That way, when you’re ready to step into that retirement phase of your life, there’s more than just money in the bank – there’s peace of mind as well.

Looking Ahead

Retirement is all about knowing what to do at each stage of your life and career, maximizing your income, and planning well for the future. If you’ve found yourself thinking more and more about retirement and whether or not you’ll be ready for it, then it might be time for a conversation.

Reach out to us, and we can help you define exactly where you are in your financial journey.