It can seem like retirement is so far away…until it’s not. And taking the attitude that there is always tomorrow can leave us procrastination when it comes to good retirement planning.
I still remember sitting at my work/student job in college, running the numbers on retirement and playing with various calculations. Even then I knew that retirement was something I wanted to better understand and prepare for and that by doing certain things, I could continue to push myself to plan and prepare for my retirement future.
Learn several simple equations early on
Learning about how money grows and how it can work for you doesn’t have to be that difficult. Learning a few calculations made a huge difference in my ability to quickly and easily plan for retirement, which takes much of the work out of such planning. And now, with the internet as a tool, making use of such calculations is even easier than when I started using them.
Understanding compound interest might be one of the most useful bits of information to help avoid retirement planning procrastination. Knowing how money grows with this financial tool in things like savings accounts or certificates of deposit can help me make decisions as to how to invest money and know how it grows, and thereby it can act as a sort of incentive to save more. And seeing how a set amount might grow over time through future value calculations can help with better understanding not only how an investment made with a set interest rate can grow over time, but also how debt — things like a mortgage, car payments, student loans, credit cards, and the likes — can affect the ability to save money and plan for retirement.
Start early and starting small
When I was just starting out, I didn’t have much money to devote to retirement savings, and as a self-employer person now, I still don’t. However, being able to get a jump on retirement and start small can make the effort more habitual and help avoid retirement planning procrastination.
One example of how I got a jump on retirement planning as a fresh college grad was by taking any money leftover after paying expenses and putting it into government savings bonds. While it may not be an exciting savings vehicle, by laddering these smaller investments over time, they gave me a way to start saving for retirement a little at a time, and they were a save way to save for the long term. As income gradually rose, I began automating my savings, pulling amounts from regular paychecks to go directly into things like an employee stock purchase plan and a 401(k). In this way, I made saving automatic, which even in small increments can add up over time.
Jump all over debt
It can get old, and frankly, be somewhat depressing to have to pay hard-earned money to others just for the right to borrow their money. From credit card and student loan debt to vehicle loans and credit cards, paying others for the right to use their money is not a way that I like to utilize my own income, and doing so can make it more difficult to plan for retirement.
By making use of things like financial calculators to see how extra payments can cut debt and interest owed, it can provide additional motivation to reduce or even eliminate debt. There are financial calculators available online to help with just about any type of debt situation. From plugging extra payments into an amortization calculator to see how mortgage interest payments can be cut to using a credit card debt calculator to find ways to reduce outstanding consumer debt and get overall debt out of the way can remove a huge obstacle to planning for a future retirement.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.