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Retirement Planning for the Late Saver

There are two great times to start saving for retirement, 20 years ago and right now. Obviously the 20 years ago timeframe is the most ideal, but this is also the rarest case. As a young person in the workforce just beginning life, there are a number of influences that get in the way of saving for retirement such as newly found bills, student loan debt or even children. While we can dive into the importance of saving early and often, that is a topic for another day. Below are some steps for those who started saving for retirement later in life or that need to begin saving now.

  1. Create or analyze your budget: Having knowledge of exactly what income you bring in each month and where you are spending that money can go a long way. This will allow you to see how much money, if any, is leftover which can then be placed into a retirement account of some sort. A budget can also ensure you don’t spend money that you don’t have since you will be following your spending limits or at least tracking all of your transactions.
  2. Live below your means if needed: By creating that budget in step 1, you will know what areas you spend too much money in. Do you need to buy that coffee every morning, or can you make it at home? Do you honestly watch all 500 channels on your cable plan, or can you lower your bill and find a plan that has your favorite channels? You don’t need to cut every luxury out of your life, but this is a time to reflect on some things that you may be able to cut back on.
  3. Stuff money into your retirement account(s): You found how much you make and where you can spend less, and now it is time to place that money into retirement savings. For 2019 the IRS raised contributions for employees who participate in 401(k), 403(b), and most 457 plans to $19,000 a year if you are under the age of 50 and $25,000 a year if you are above the age of 50. While saving that much may seem unrealistic for your situation, at least contribute enough to be receiving a company sponsored match if provided. This will provide you with “free” money. Another retirement vehicle to utilize is an Individual Retirement Account (IRA). The 2019 limit for anyone under age 50 is $6,000 and $7,000 for above age 50.
  4. Stay within your risk tolerance: Feeling behind may persuade you to take on too much risk in hope for great returns. It is tempting, but stick with a portfolio that will allow you to stay disciplined through whatever the economy and stock market does. Your ratio of stocks, bonds, and alternative investments is important, so don’t deviate from that ratio too far.
  5. Create a retirement budget: How much you need for retirement will be based strongly off of what you want to do in retirement. Traveling the world, eating out more, or finding a beach house all have different costs. Creating a plan of how exactly you plan to spend your money in retirement might seem like a lot of work, but this will be the most accurate picture and assist specific goals needed.
  6. Don’t pay attention to what the internet says: Google has great information; however, when it comes to customizable topics such as retirement there aren’t great answers. Everyone has different goals and career paths that it is hard for one answer to be correct for a lot of people. Retirement in a messy topic that has no easy answer a lot of the time. Work on sticking with your plan and you will be in a much better retirement mindset than before.

Preparing for retirement is a lot of hard work and even harder to play catch up, but there are no shortcuts. Once you begin saving or analyzing your current situation, stick with your plan and you will find yourself sleeping better at night. If you have retirement questions or concerns, I encourage you to contact First National Bank and Trust. We would be more than happy to visit with you and help navigate your path to retirement.

Contact me at 217-235-2148 to schedule an appointment to work on your personal retirement plan.

 


Matt Riley-2

Matt Riley was named Fiduciary Officer, VP, for First National Bank and Trust Company in January 2019. Riley has four years of experience in risk analysis, serving most recently as a Risk and Compliance Analyst at State Farm Bank in Bloomington, Ill. As a Fiduciary Officer, Riley will manage First National Bank’s trust portfolio while helping clients find new ways to meet their prosperity goals. He will focus on growing the portfolio and working to establish relationships with referral sources.


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