Even if you're not planning to retire for several decades (or longer), you may have read the myriad articles indicating that most American adults are ill-prepared to support themselves after they've stopped working. Even with Social Security and Medicare, many seniors may wind up needing to work longer than expected. Although it's not always possible to avoid this outcome—after all, life happens—there are a couple of things you can do early in your career to ensure that your road to retirement is a less bumpy one.
Invest Early and Often
If you've ever fallen behind on a credit card bill and find yourself struggling to keep up with rising interest payments, you're already well aware of the way compound interest can exponentially increase your balance. The same principle works for retirement balances: if you begin contributing to your 401(k) or IRA early and keep up these contributions regularly, these funds will have decades longer to multiply than the funds you deposit in the years before retirement. Even if you can't afford to contribute much, contributing something is far better than putting off all retirement contributions until you're in a more stable situation.
Don't Skimp on Insurance
For many people in their twenties or early thirties, life insurance can seem like an unnecessary expense. Even though life insurance rates are generally quite competitive for those in these low-risk age brackets, other financial obligations can often take precedence over an insurance policy that (hopefully) will never be used.
But once you have someone else depending on your income, your ability to earn an income, or the other many intangible benefits you provide to your household, life insurance gains a newfound importance. If you're the primary breadwinner, you'll want enough life insurance coverage to replace your salary for at least a few years, especially if your surviving spouse may need some additional education or training to re-enter the workforce. If you're a stay-at-home parent, you'll want sufficient coverage to "hire out" the many roles you fulfill, from childcare to housekeeping services.
The last thing you want is for your surviving spouse to be placed in a financial bind while grieving your death, and putting just a few dollars a month toward a life insurance policy can significantly ease this burden.
While you're shopping for life insurance, it's also important to investigate your short- and long-term disability options. More than 25 percent of young adults will, before their retirement, spend at least one year out of work for disability-related reasons. As with life insurance, the premium rates for short- and long-term disability insurance can be quite cheap for those who are young and in good health, and locking in these low rates now can provide you with some major savings over the long term.
Contact retirement planners in your area for more information.
When it comes to making things right for you and your family, there are only so many times you can struggle with finances. I didn't used to care too terribly much about finances, but after dealing with near bankruptcy more than a few times, I knew I had some big decisions to make. I started working with a financial planner to address various issues that we were facing, and we realized that there were some mistakes we kept making time and time again. After going through and evaluating our spending, we made some big steps towards clearing up our finances. Read more on this website to learn about finances.