Why You Should Start Planning Your Retirement in Your 30s

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You’re probably reading this article today and thinking to yourself that the golden years of your life are far away. You’re likely in your late 20s and enjoying your life. Plus, you may not have even thought about putting some roots down by getting married and having kids.

Whether you plan to start a family one day or prefer leading the bachelor lifestyle, there’s one point you need to consider: you must plan for your financial future. When you eventually reach retirement age, you shouldn’t assume the government will take care of your expenses.

You also shouldn’t assume that you’ll somehow have plenty of money to live comfortably when you’re no longer working. That’s why it makes sense to plan for your retirement sooner rather than later.

Planning for your financial future in your 30s make sense for several reasons. Firstly, you’ll have a greater understanding of how you want your life to progress. Secondly, planning from your 30s will give you plenty of time to secure your financial future.

The following ideas and tips will give you some inspiration on how you can start planning for your retirement the right way:

Pensions

You’re likely working, either for an employer or yourself. You should put aside some of your monthly income and save it into one or more pension plans. When you retire, you have several options on what you can do with the money in your pensions.

For example, you can withdraw your private pension funds as lump sums, or you can have payments made over the rest of your lifetime. If you choose the former option, you’ll need to ensure that money lasts.

However, if you choose the latter option, you can rest assured knowing that you’ve got a fixed monthly income when you retire. Once you retire, you can then work out if you still need to free up money from your other assets or if your pension fund is enough.

When selecting private pensions to set up in your 30s, consider ones that have insurance. That way, if the pension fund falls short of your target goal, the insurance will cover any disparity, so you won’t need to panic about living a comfortable lifestyle in your golden years.

Investments

Another point to consider in your 30s as you begin planning for your retirement is whether you should invest in anything. As you probably know, there are scores of different ways to invest money these days.

You might also be aware that some investment options are riskier than others. However, riskier investments typically offer higher returns. Overall, investments are a good way of making money grow over long periods.

Whatever investments you choose, it makes sense to have a varied and diversified portfolio to avoid the “having all your eggs in one basket” scenario that often leads to failure. If you’re wondering which investments you should choose, it’s worth speaking to a financial advisor.

Such a professional will discuss your financial goals, determine the levels of risk you’re happy with, and present a series of suitable investment options that match your needs. Whatever you do, avoid making significant decisions alone without any professional help.

Savings

You’ve already thought about and (hopefully) organized pensions and other investments, but what about savings? You should also consider putting money aside into savings accounts regularly as part of your retirement planning strategy.

Regular savings are perhaps the safest or least risky way of making your money grow. The only downside to such a secure way of increasing money is that the growth rate is slow. Still, it’s an excellent accompaniment to any retirement plan.

You’ll have a wide array of choices when it comes to selecting the right savings accounts for your needs. It makes sense to look at tax-free savings options, as otherwise, you could end up losing money rather than increasing what you deposit into your savings accounts.

Thankfully, there are many tax-efficient savings options out there. As with all investments, it makes sense to seek the advice of a financial advisor. Alternatively, spend some time online researching which tax-free savings accounts offer the highest returns.

Property

Whether you choose to put roots down or not, one thing’s for sure: you need somewhere to live. You could live with your parents in your family home to avoid paying much rent, but there aren’t many people that would be ecstatic about such an option!

Renting is acceptable as a temporary option, especially if you move to a new location due to work. But, for the long-term, you should consider investing in property, i.e., buy a house. Property is one of the oldest investment options, and property investors tend to do well.

However, you should know that buying a property is a long-term investment. Still, what’s great about buying a house is that you can live in it and avoid wasting money on rentals! You can make your home look great and increase its value simultaneously.

When you reach retirement age, you can then sell your house and move to a smaller property, or perhaps one by a coastal location. The possibilities are endless, but what will happen is you should end up with a sizeable profit from the sale proceeds.

Estate Planning

Last but not least, it makes sense to conduct some estate planning. In a nutshell, estate planning is where you decide who gets which assets such as money or property when you die.

In fact, estate planning is something you should consider outside of your retirement planning as, unfortunately, nobody knows how long they’ll be around for, and you want to make sure your money and worldly goods go to the people that matter most in your life.

How you want your assets distributed isn’t something that gets set in stone. You can amend your wishes as much as you like. For example, you might want to ensure your spouse or children get more of your assets than other family members.

A law professional should be your first point of contact when organizing your estate planning. They will ensure your instructions get executed according to your wishes, and they will keep documents like your will safe and secure until the time comes where they must get read out.


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