Retirement Guide for Any Age: Saving Smart for Your Stage of Life

Saving for retirement is something we all know we should do — but it seems like at every stage in life, there’s at least one thing that can stop you from saving. Whether it’s paying for a wedding in your 20’s or taking on a second mortgage in your 50’s, the financial needs of now can make it difficult to budget for the future.

Keep reading to hear from Lonnie Scarborough, executive vice president of retail banking, about tips for saving at every age. With more than 45% of Americans unable to easily cover an emergency expense of $400, it’s important that you start saving now for retirement as well as the occasional “rainy day.”

20’s: During your early 20’s, Lonnie admits that it can be difficult to think about retirement if you’re a student or just finding your feet after finishing college. The important thing, he says, is to start saving anyway — even if only a little bit — in order to get in the habit of investing for your future. One way to make the process easier is to opt to have a portion of your paycheck directly deposited into a 401k or savings account. You’ll get into a routine of saving for retirement and thinking ahead.

“In 1987, I was a senior in high school when Prince’s ‘1999’ came out. At the time, 1999 seemed so far away — I felt like it was impossible to plan for that far ahead. That kind of mindset is dangerous when it comes to saving for retirement, because I can assure you that 30-40 years will pass by before you know it. Now I look back and see that 1999 was a long, long time ago…”

30’s: If you’re at a point in your life where you have kids and are thinking of expanding into a new home, Lonnie suggests making sure you budget for savings before taking on a new mortgage, finding a home that you can easily afford, and looking at market trends to see whether a 10-, 15-, or 30-year mortgage is the best fit for you. One question to consider is how disciplined you are when it comes to putting cash aside into a savings or investment account. If paying your monthly mortgage is a good way to hold yourself accountable to an investment, perhaps larger monthly mortgage payments (based on a 15-year mortgage instead of a 30-year mortgage, for example) make the most sense for you. Another good tip for parents in their 30’s: Start teaching your kids good savings habits.

“There’s no age that’s too early to start saving. Start a savings account for your child or grandchild, and have them contribute a little bit from their birthday money every year or their allowance every week. That way, you’ll develop a habit that they’ll keep for life.”

40’s: As retirement draws closer, many people might realize that they haven’t saved enough to live the retired lifestyle they imagine. At this point, you’ll need to start seriously saving for retirement and contributing as much as you can to your 401k. Remember that 401k’s have contribution limits, so consider other investment options if you need to save more. In your 40’s and beyond, you may want to look at lower risk investments that are projected to remain stable in the next 10-20 years.

“If you’re just starting to save at this age, you will need to invest large amounts of money to your retirement savings at once in order to make up for lost time. It can be hard if you’re helping pay for your kids’ college tuition or considering a vacation — but if you don’t save enough, you could be working through your 60’s and 70’s instead of spending time with your grandkids.”

50’s: As retirement draws near, you might want to start budgeting for the future and coming up with an action plan that makes the most sense for your savings. At this point in life, Lonnie says that many individuals might be expecting a family inheritance but that they should never rely on it completely.

“An inheritance should be viewed as a blessing that pads your nest for retirement, not starts it. You should have plenty saved up in your own accounts to cover your retirement needs.”

Are you ready to start saving? No matter what stage of life you’re in, it’s not too late to think ahead. Contact the Origin Bank team to get started.