Too young to retire and too old to get a job! There are many people in their forties and fifties that feel that way. They lost their jobs in the recession and cannot find another one. They already exhausted their unemployment and have given up. That’s right, they stopped looking! They do not have the savings they should have and they gave up. What should they do?
You can never start saving early enough! Having money means choices. Thanks to savings, I was able to buy my first house when I was 27 years old. Cash allowed me to assume their loan. Yes, you could do that in those days! If I only had the normal 20% down payment, I would not have the opportunity to assume their loan at nearly 2% below the prevailing interest rate. I ended up buying a home that was distressed at 25% below market.
Saving and Investing
Savings provides choices. My mortgage payment was lower than my monthly rent! I had no consumer debt or car loans. This provides a lot of flexibility and it all starts with savings. Those were the days before 401(k) and IRA plans. I guess that makes me old! I worked for a Fortune 100 company that had a very lucrative profit sharing plan for retirement. I still saved for the future by setting up a payroll deduction. That was forty (40) years ago!
Although interest rates were not as low as now, it was not high enough to make my savings grow faster than inflation. What does a saver do? I started to think about investing! At first, I started with bonds then stocks. I watched my investments grow, but it was nothing compared to real estate. My home doubled in value in less than three (3) years! I liked real estate because I could have more control over the investment.
In about three years, I bought another home using the equity from my first home to buy my dream home. It was about a year later that I started to invest in income property. Should everyone invest in real estate? As the real estate bubble may indicate, it is not always a wise decision. Saving and investing is important to planning your future. Having emergency savings is important, but not the only savings you need.
When do you want to retire? Whether it is in ten (10), twenty (20) or forty (40) years, you need a plan. Your plan can derail from job loss, illness, accident, natural disaster or divorce. Planning for all these things and more is not only possible, but necessary. It is similar to getting married and starting a family. You can have insurance for illness or certain disasters and the rest requires planning. Planning requires saving and investing!
When do you want to retire? There are plenty of retirement calculators to help you determine what kind of retirement you would like to have. Let’s start from the beginning! You are twenty-two (22) years old and a new college graduate. How much do you want to live on in retirement? The retirement calculator will tell you how much to save and how long it will take to achieve it.
Putting aside ten (10) percent of your income for forty (40) years will probably be enough for retirement at a reasonable lifestyle. Starting early means you can handle what may normally derail your retirement twenty (20) years later. Most people do not set aside ten (10) percent in savings right out of college because of student loans. Starting early is important!
Career describes an individuals’ journey through learning, work and other aspects of life. Whether you decide to work in corporate America, become an entrepreneur or retire early. You need a plan because a goal without a plan is just a wish! You need a plan because a goal without a plan is just a wish! You need to know where you are heading and how you will get there. Some people start out in college not know ing what they want to do and graduate no closer to their goal.
You may start a career and still not know what you want to do, but you need to think about it or you will work aimlessly because you do not have a goal and a plan. There are life coaches, career tests and counselors that can help you, but it is your decision. No matter what, don’t stop saving or you will be tied to your job and have no choices. This last recession has shown us that the recovery may be a jobless one. You could be in your forties or fifties and unable to get another job. Your savings will provide a choice to start a business, retire or just support yourself while you decide what to do.
There are a lot of things that can derail your plans and you have to plan for it. Savings and investing, retirement planning and career planning is supposed to help you avoid these issues. You need to do this planning when you are young so you can have the things you say you want when you are older. It is never too late, but the earlier the better! Remember that planning is not the destination, but the process! You will always plan to help you achieve your goals. It is the best way to reach your goals. When do you want to retire?
Photo by: Lord Jim
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When do you want to retire?