The average retirement age in the United States is about 65 for men and 63 for women, according to data published by the U.S. Census Bureau. Planning for retirement as soon as possible can help create a financially stable future. This process involves establishing a budget and saving for specific retirement goals. It is also important to stay on track with the plan and potentially make certain sacrifices for the greater good.
Why Set Your Retirement Goals For 2021?
Setting goals for retirement is an essential step towards becoming more financially secure in the future. Without a budget and goals to strive towards, a person is more likely to spend frivolously, leaving less savings for retirement.
Setting and analyzing retirement goals regularly is a critical component of financial planning and provides an opportunity to review current finances and update budgets and objectives. Working towards established retirement goals can also provide security, knowing that the future appears optimistic.
6 Steps For Planning Your 2021 Retirement Goals
Saving towards retirement should be a lifelong endeavor that involves hitting key milestones at different ages. The following steps can help adults begin planning their 2021 retirement goals:
Give Your Money A “Job”
Without key objectives, it can be hard to create practical retirement goals that are measurable and achievable. Give all income that comes into the household a “job.”
Create a budget that defines where each dollar goes to determine how much extra is left at the end of each month. That money can then be put towards other purposes, such as paying off debt and saving for retirement. Financial goals should align with a person’s lifestyle and the type of life they want to live both now and in the future.
Categorize Each Retirement Goal as Short-, Mid- or Long-Term
Financial goals should be specific and measurable, meaning a person should know the approximate amount of time it will take to complete the goal. After creating a list of retirement goals, categorize each goal as short-term, mid-term or long-term on a financial goals worksheet.
A short-term financial goal can be completed within six months to five years, such as creating a $5,000 emergency fund. A mid-term financial goal has an average length of five to ten years. Eliminating all debt is a good example of this type of goal. Planning for early retirement would be an example of a long-term financial goal.
Set A Target Date For Each Retirement Goal
Avoid setting ambiguous retirement goals that can be easily overlooked or pushed further back. Setting specific goals with targeted deadlines creates accountability and motivation to reach important objectives. Consider exactly how much money will be needed and when it will be needed when setting goals.
For example, a parent may have a goal to save $15,000 for college tuition and fees by 2030 when their child starts college. With this amount and target date in mind, it is easy to determine how much money needs to be saved each year to reach that amount by the target date.
Prioritize Each Retirement Goal
Some retirement goals will naturally take priority over others. Along with categorizing retirement goals by period of time and assigning target deadlines, prioritize each retirement goal. Label each financial goal on the worksheet based on which should be funded first and which can be put on the backburner if financial constraints develop.
Place each goal into three main categories: crucial, need and want. Paying off a high-interest credit card may be considered “critical,” while trading in a vehicle that is still running fine is a “want.”
Know How Much You Have To Save
Planning for retirement involves conducting a deep analysis of how much money is going in versus how much is going out each month. Look at how much money is received in terms of income, investments and other income sources. Also consider if there is any money in savings accounts, such as 401(k)s, Roth IRAs, 403(b)s and IRAs.
Log these numbers on the worksheet to determine how much money is already available and how much more is needed to reach retirement goals. For example, there may already be $20,000 in a savings account for a down payment on a home and $15,000 more is needed within 12 months. That means that $1,250 needs to be saved each month to reach the goal on time.
Work With Campbell For Your 2021 Retirement Goals
Saving for retirement is an ongoing process that requires commitment and a basic understanding of personal finance. Consult with an experienced wealth management and investment firm to better understand retirement planning and how to best prepare for the future and protect against costly risks. To learn more about retirement planning in 2021 or to speak with an experienced wealth management advisor, contact Campbell Wealth Management.
