7 Retirement Savings Goals To Retire Right

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Are you in your early 20s and just starting to make your own real money? Or are you already in your mid-40s with kids starting to grow up? Regardless of your age, you need to consider planning for your retirement to achieve ideal results. Without a retirement plan, you may be working into your late 60s or even early 70s! This is not a scare tactic or an attempt at financial shaming. It is an unfortunate reality, especially with social security at risk of being gutted in 2023 or 2024. 

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It is sad to note that a quarter of Americans do not have savings for their retirement. Younger people aged 18 to 29 make up 45% of Americans who do not save up much or anything for their future retirement. The retirement numbers, however, improve as people age. 

Nevertheless, millions of Americans do not know how to save enough money. The key is to set retirement savings goals so you can retire right and before you get too old or frail to enjoy life.

You must take your retirement planning into your own hands because nobody can guarantee Social Security, Medicare, and your investments will remain fully intact when you reach age 65 or 67. If you want to retire even earlier, you must be even smarter and more aggressive with your earnings, savings, and investing.

Continue reading below as we discuss seven important goals for your retirement planning done right for 2024.

The Need to Save Up Early

We see it in the media and we hear it from senior citizens we know: An elderly person ending up dirt poor upon reaching their retirement age or very shortly after. 

Though many are aware of the risks of not having a retirement fund, they still do nothing about it until they are all too close to being retired.

The only time they will scramble to save money for retiring is when they are too old or weak for a 9 to 5 job. Sometimes, they will only realize the importance of a retirement plan when it is all too late.

Hence, you need to start somewhere with your retirement planning. In case you feel that you cannot keep up with the savings, there are options like the Secure Act to give you a boost. 

But the best way to kick-off your retirement plan is to come up with retirement savings goals. And you need to start working on them as early as today if you want to retire right tomorrow.

Retirement Savings Goals

When it comes to financial goal-setting, there is a lot to consider. However, some money goals are non-negotiable. Furthermore, you need to realize that these retiring financial goals come with a timetable.

You need to attain specific retirement goals once you reach particular age brackets. These financial goals should also take into account inflation and taxes, since both are on the rise.

Let’s take a look at seven of the most important savings goals you should focus on to retire right.

1. Start with an Emergency Fund

The best time to start working on your retirement goals is in your early 20s. This is the time when you are on your first or second job. Thus, your first goal is to have a fully-funded emergency fund by age 25. 

An emergency fund will serve as the backbone of your retirement plan. In case an emergency happens, the fund will cover the expenses. You want to create a fund that is equivalent to at least three to six months’ worth your salary.

Also, consider securing personal health insurance. By age 26, you will be living on your own. Hence, you don’t want to get sick without any coverage or it could cost you a fortune for treatment.

Finally, this is also the stage where you need to start your contributions to your retirement fund. Try to go for an IRA or 401(K). You can start a Roth IRA or Traditional IRA free at most banks or brokerages. If you start your contributions while you are young, you will maximize the power of compound interest. When it comes to investing, sooner is better! 

Another option in 2023 and 2024 is opening a high yield savings account (HYSA) now that interest rates are 4-5%. An HYSA is a secure and liquid account with minimal or no restrictions that can safely grow the money you save. Just be hesitant to invest in regional banks and don't invest more than $250,000 into any one account, so you can maintain FDIC insurance on your balance.

2. End Your Student Loan Debt

Once you reach around 30 years of age, your focus must be beefing up your financial foundation. You don't want to be paying huge student loans into middle age. Thus, your first goal is to settle your student loan debt as fast as you can. This is crucial considering you will soon need to save up for your kids’ college tuition. To pay off your own student loans sooner, consider a debt consolidation company.

Once you put to bed your student loan debts, start working on your home down payment or improving your existing mortgage. You want to have a home you can truly call your own, right? Then save around 20% for the down payment and aim for a 15 year fixed mortgage if possible to minimize interest paid. 

If you already have a family, consider buying a life insurance policy. Also, establish a last will and update it every year to protect your family finances.

Lastly, increase your retirement contributions to 15% of your income to ensure you can retire securely.

3. College Plan for the Kids

By the time you hit your 40s, your main goal is to work on your kids’ college expenses. Don’t be like other parents who only start worrying about their kids’ college when they are a year away from it.

But first, make sure to eliminate all your consumer debts. These are debts that are outside your mortgages.

Moreover, make it a goal to save an amount that is twice your annual income. This is the amount you want to put into your retirement fund.

4. Reach Your Maximums

While still in your 40s, you also want to hit your savings maximum. Doing this will help you reach a target of having $1.5 million worth of savings by the time you reach 67. 

The computation is to save $10,000 every year with a 9% interest rate in effect. Sounds hard right? This is doable if you fund your 401(K) up to the maximum limit.

5. Mix and Maintain

Another important goal for aspiring retirees is learning how to mix and maintain your investments. 

The key to maximizing the gains of your investments is diversification. This means not placing all your eggs in one basket. 

People in their 40s still have a relatively high-risk appetite. However, they must also be wise where they put their money. 

Consider investing in stocks, ETFs, and mutual funds. But make sure to leave some of your investment eligible money for more conservative options like bonds or even gold.

Additionally, you need to learn how to make tough financial decisions when necessary. Make some financial compromises with your purchases if needed, but not at the expense of your retirement savings.

6. Go the Extra Mile

By the time you hit your 50s, your goals must be solidifying your financial foundation. Do this by paying extra on your home loans or mortgages. This is doable now that you already eliminated your consumer debts.

If you finish securing your children’s college fund, channel some of your extra dollars toward your home mortgage.

Additionally, consider buying long-term care insurance when planning for retirement savings goals.

7. Apply the Finishing Touches 

Once you reach your 60s, your goal is to fine-tune your retirement goals. Talk to a financial adviser and ask for guidance if you need to make any tweaks in your finances.

Also, revisit your life insurance and last will. Update these financial policies if necessary. 

It is also about time to transition your investment portfolio to being more risk averse. Consider transitioning some of your stock holdings into bonds or annuities if it makes more sense.

Increase Your Financial Knowledge

By working on these retirement savings goals early, you will save up more money without feeling much pressure. Furthermore, you will get to secure the future of your kids and avoid becoming a financial burden in retirement. Retire right!

But financial knowledge and budgeting isn’t all about retirement. Hence, we invite you to increase your knowledge by checking our other articles to help you retire securely. We provide guides and tips to help you become a wiser manager of your financial and retirement resources.

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