At this stage of your life, you might be feeling your financial resources pulled in a lot of different directions. As you look ahead to anticipated expenses in the coming years, saving for retirement may become a bit of a balancing act.
Refine and expand your plan
Now may be a good time to revisit your retirement savings plan and learn some tips to help you stay on track.
- Revisit your savings plan. If you've been balancing financial priorities, now might be the time to refocus on the future. Unlike college or cars, you can't take out a loan to fund retirement.
- Check your investments. Confirm that your asset allocation strategy is aligned with your goals.
- Protect yourself and your loved ones. Check that your will and other documents are up to date and that your beneficiaries are listed where applicable.
- Plan for the unexpected. Determine if you have the appropriate levels of life, homeowners, and other insurance.
Prioritize saving for retirement
People are living longer. That means you could be retired for nearly as long as you worked. How will you generate income for that period of time, and how much will you need?
- Take advantage of the potential tax benefits your retirement plan offers. If your company matches contributions, consider contributing at least as much as your employer will match. Or, think about taking small steps toward contributing to the plan or IRS's maximum allowable amount.
- Contribute additional money. Consider setting aside additional money you may receive during the year, such as bonuses, raises, and tax refunds, to help accelerate your saving.
- Strengthen your emergency fund. Most experts agree that you should set aside 3 to 6 months of your living expenses in an easy-to-access account such as a checking or savings account. If you haven't already, consider an emergency fund in case something unexpected arises.
Ramp up your current retirement plan contributions
Depending on your retirement goals and how much you have already saved, you might need to be saving more than 10% of your income (possibly 15% to 20%). If you're looking for more ways to save, consider contributing to an IRA as an additional way to help meet your savings goals.
Manage your "sandwich" plan
Many adults are not only raising their children, but also looking after their aging parents. With good investment planning and a realistic perspective, many of those in today's "sandwich generation" can overcome the financial challenges and help keep their parents, children, and themselves, going strong.
- Teach your kids well. Teach your kids about saving, making smart purchases, and the importance of managing their money.
- Keep saving. When it comes to planning, nothing beats the power of compounding. If you are thinking about setting up college funds for your children, the sooner you start saving, the more options and opportunities you create for you and your family down the road. Get the kids involved in saving for their future, too.
- Talk to your parents. Talk to your parents or consider getting them in touch with a financial advisor to discuss their current situation and their plans for the years ahead.
- Consider insurance. Look into the benefits that long-term care insurance could provide for your parents.
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