Getting started is probably the hardest part of a retirement plan. It's so easy to think your retirement is decades away so why not wait just a little longer to start planning for it. Procrastination could cause you to lose thousands of dollars. Procrastination could mean the difference between a comfortable retirement and one where you are barely getting by. If you're between the ages of 20 and 40, you're probably buying a house, a car, furniture, and thinking about your kid's college fund. You probably think you can't afford to save for your retirement at this time. You're wrong. Even a small amount invested wisely could be very beneficial in years to come.
Goal SettingOK, you've decided to start planning for your retirement so where do you go from here? The first thing you must do is to list your retirement goals. Do you want to travel? What about moving to a better climate? Maybe you want to stay where you are and enjoy gardening. Whatever your goals, you will need an income. You could quite possibly be retired for 30 or more years so you need a plan that will provide an income for several years. How much money will you actually need when you retire? Use this handy calculator to find the answer to this question.
BudgetingNext, if you already haven't done so, create a budget. If you don't have a clue about how much you spend from month to month, keep a journal of every dime you spend for three months. You'll see where your money is going and be able to better manage expenses. Your budget must include a payment to your retirement plan even if it's only a few dollars.
Family MembersDiscuss your retirement plans with your family, especially your spouse or significant other. Chances are you'll both retire at about the same time so you need to be in agreement on this critical part of your life. If you both have a career, you will both be contributing to the retirement fund. Make your decisions together and try to develop a plan that will be acceptable to both of you.
Watch for Plan BustersEven the best retirement plan could be in serious trouble if you allow yourself to dip into it for frivolous luxuries. If your budget doesn't seem to cover all your expenses, chances are you are confusing necessities with luxuries. Do you really need a pager and cellular phone for everyone in the family? Do you need call forwarding, caller ID, or the second phone line? Little things eat away at your budget. You don't have to do without, just spend wisely.
Making ChoicesNow that you have some money put aside, you need to think about investing so that your nest egg will grow.