It’s never too early to begin planning for your retirement. In fact, the earlier you start your planning, the greater security you’ll have when the time for retirement arrives. Many people in their 20s and 30s view retirement as something that is so far in the future that it’s hard to make it a priority. Honestly, it’s likely the last thing on your mind. After all, your career is just beginning.

You may contribute to your 401(k) program and get the matching bonus from your employer. That’s free money! But retirement planning and saving aren’t yet at the top of your “to-do” list.

Retirement planning, though, is about much more than just saving money. Decisions you make today can have huge impacts on your retirement plans 20, 30, and even 40 years from now, including your ability to manage your money and debt. 

These are four reasons to begin your retirement planning early.

1. Build Your Savings

Small investments in your retirement today can prove extremely valuable to you decades down the road. The earlier you begin setting aside money for retirement, the more time your money has to work its compound interest magic in your favor. This means you’ll earn money on the interest you make along the way. That’s a HUGE reason to begin saving money early.

2. Keep Debt Low

Saving now establishes good habits to help you manage your debt for the rest of your life. The goal is to have as little debt as possible. You especially want to avoid high credit card debt and other unsecured debt. While mortgages and auto loans are often necessary, frivolous debts often work against you. 

As you age, new expenses arise, including things like:

• Purchasing a home

• Starting a family

• Saving for kids to go to college

You’re much better prepared to handle these expenses if you’re not drowning in large amounts of debt.

3. Plan for Taxes

As you work on your investment strategy, it’s important to understand that depending on the investment types, you may have tax ramifications when you are ready to withdraw that money after retirement. Consider a few key questions and allow them to dictate your retirement planning:

• Should you pay taxes now in return for lower taxes when you retire? 

• Will taxes be higher when you retire?

• Do you wish to defer, at least, some of your taxes until retirement?

• How can you maximize your investments to minimize taxes now and later?

The sooner you begin planning for post-retirement taxes, the easier your investing becomes.

4. Learn About Multiple Income Streams

Pay attention to investment strategies that provide multiple streams of income once you retire. Many people plan to live with some combination of Social Security retirement income and personal retirement income. The only way to improve your Social Security income during retirement is to wait longer before retiring. 

While you are young, though, it’s much easier to work longer hours to set aside more funds for retirement (not to mention take advantage of compound interest on these funds) than when you are older. Keep that in mind and “front-load” your retirement as much as possible.

We understand that retirement planning, when young, is difficult. We’re here to help provide you with sound advice for retirement savings and how to maximize your efforts. Give us a call at 248-322-9800 extension 5 or visit us in a branch to start a no cost consultation with a Genisys Investment Services Representative. We’re ready to discuss various retirement and savings accounts that may aid you in your effort.

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