Do you think you’re too young to plan for retirement? The fact is that no one is too young to begin this most serious financial task. Whether you’re in your twenties, thirties, or older, it’s never too early to set aside funds or make a strategy for a comfortable retirement. No matter your age, here are four things to know about retirement lifestyle as it related to finances.
Save Early and Often
Spend five minutes investigating the power of compound interest, and you’ll quickly realize how powerful even a small, regular contribution to an interest-bearing account can be, especially for working adults in their twenties. By the time you hit your sixties, those relatively small monthly or weekly set-asides have the potential to grow amazingly large. If possible, sign up for a payroll savings plan and contribute something, anything on a regular basis. Even if you exceed your IRA donation limits, you can still stick the additional funds into a growth account. Don’t let the modest tax burden deter you from saving for your senior years.
Know That You Can Sell Your Life Insurance Policy
Unless you work in the financial industry, there’s a good chance you are not aware that it’s rather common for people to sell their life insurance policies when they no longer need them. It’s important to learn about the pros and cons of these kinds of transactions, called life settlements. Knowledge is power, and in this case a full understanding of life settlements will help you get the highest possible cash value should you decide to sell. Another piece of the puzzle is finding out whether the kind of policy you own can be sold. The advantage to having a policy you can sell is that you can rely on the proceeds for just about anything, including taking a trip, to pay medical bills, or to finance a grand child’s education.
Consider Monetizing an Enjoyable Hobby
One of the smartest ways to add some income during your later years is to monetize a hobby. With the advent of online sales sites, this option is one that just about anyone can benefit from. For instance, you can sell your oil paintings, sculptures, craft items, coins, baseball cards, or collectible pocket knives. Pretty much any hobby that involves making or collecting something can be turned into an income stream after your working years are over.
There’s nothing wrong with renting an apartment or house on a temporary basis. But, if you want to solidify your financial picture, consider purchasing a home before you turn 30. That’s a key age because it allows you to own the property outright before age 60, even with a 30-year mortgage. To really add some to homeownership, buy in your mid-twenties and work to pay the mortgage off in 20 years or less. That strategy helps free up a significant chunk of your monthly budget by the time your reach your fifties. If you can do that, you’ll be way ahead of the curve when it comes to building a stress-free retirement.