When To Start Planning For RetirementPosted on February 15, 2023 by shieldsandboris
Are you worried about retirement? You are far from alone. The Goldman Sachs Asset Management (GASM), nearly 60% of adults cite retirement as a significant source of stress. One of the primary reasons why retirement planning can be stressful is that most people do not know exactly what they need to do to protect themselves and their families—including when to start.
You may be wondering: When should I begin retirement planning? The short answer is “as soon as possible”—there are benefits to starting in your 20’s. No matter your situation, a good time to begin retirement planning is now. Our Pennsylvania retirement planning lawyers provide an overview of the key things to know about when to begin planning for retirement.
The Challenge: The Three-Legged Stool of Retirement Security is Wobbling
The so-called “three-legged stool” is a long-standing retirement planning metaphor. The Social Security Administration (SSA) describes the three-legged stool as consisting of “Social Security, private pensions and savings and investment.”
However, in recent years, this way of thinking about retirement planning is increasingly outdated. To start, the Social Security system is under strain due to demographic shifts, with fewer workers supporting a growing number of retirees. At the same time, traditional pension plans are becoming less common. Fewer and fewer workers are part of a traditionally defined benefits plan.
In effect, many individuals are left to rely more heavily on personal savings and their own investments. Unfortunately, many people are not saving enough for their retirement. They are at risk of a significant reduction in their standard of living in later life.
Earlier is Better: The Advantages of Starting Retirement Planning in Your 20s
Starting your retirement planning in your 20s has numerous advantages over waiting until later in life. The answer to the question of when you should start retirement planning is when you are earning a paycheck and have at least some disposable income. Even a seemingly small amount saved for retirement in your 20s can pay huge dividends. Here are a few of the benefits that come with taking a proactive approach to retirement planning at a young age:
More Time to Save: By starting early, you give yourself more time to build up your retirement savings and take advantage of the power of compounding. CNBC has some excellent charts available that show the power of saving for retirement while you are young. Over time those savings will grow significantly.
Greater Flexibility in Investment Choices: When you have more time to invest, you can afford to be more aggressive with your investments, taking on more risk in pursuit of higher returns. Of course, you should always be responsible. Still, more flexibility often means a far larger nest egg when you eventually retire.
Opportunities to Adjust Your Plan: The earlier you start planning for retirement, the more opportunities you have to make changes to your plan if needed. Among other things, you can adjust your savings rate, reevaluate your investment choices, and make other modifications as your financial situation changes over time.
Less Stress Later in Life: By starting early, you can avoid the stress and anxiety that often come with waiting until later in life to plan for retirement. Indeed, this is one of the greatest benefits of starting retirement planning early. You do not have to worry nearly as much about your finances later in life.
It is Not Too Late to Get Started: The Right Time to Focus on Retirement Planning is Now
Are you in your late 20s, 30s, 40s, or early 50s? Even if you have not truly started the retirement planning plan process yet, there is still time. While the ideal time to begin retirement planning is as soon as possible, the best time for any particular person is now. For those who may not have started planning for their retirement in their 20s, it is important to understand that it is never too late to get started. You can still put a strong plan in place. Here are some essential things to know:
The Power of Compounding Still Works in Your Favor: While starting early with retirement planning is best, even starting later in life can still result in significant savings over time, especially if you can save consistently and invest your money wisely. Compounding still works in your favor, even if you have less time.
There are Special Rules for Catch-Up Contributions: If you are 50 or older, you can make catch-up contributions to your retirement accounts, which can help you build your savings faster. Make sure you take advantage of these specialized rules.
Everyone Needs a Comprehensive Retirement Plan: A retirement plan is about much more than just your finances. It is about ensuring that the right structure is in place to protect your health and your family. An attorney can ensure that you have a strong legal plan in place, including a will, power of attorney, and other estate planning documents.
The Elder Law Offices of Shields & Boris Provides Reliable Retirement Planning Services
Retirement planning is complicated. You and your family do not have to figure out everything on your own. At The Elder Law Offices of Shields & Boris, we proudly provide personalized and comprehensive retirement planning services to people and families throughout the Pittsburgh area. Along with other legal matters, our Pennsylvania retirement planning lawyers can help you with the following:
- An estate plan;
- Asset protection;
- Wealth preservation;
- Beneficiary designations; and
- Long-term care planning.
Contact Our Pennsylvania Elder Law Attorneys Today
At The Elder Law Offices of Shields & Boris, our team has more than 65 years of elder law service. If you have any specific questions or concerns about retirement planning, we are here as a resource. Give us a call now at 724-235-7939 or contact us online to arrange a fully confidential initial consultation. From our law offices in Wexford, Bridgeville, and Beaver, we are well-positioned to provide retirement planning services in Pittsburgh and throughout Western Pennsylvania.
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