If you had an extra $200 every month, what could you accomplish?
· A trip?
· A home reno project?
· A healthy rainy-day savings?
· Regular date nights?
For one of my clients, $200 a month equates to an all-inclusive trip down south once a year, sipping margaritas on a white sand beach without a care in the world.
$200 a month can be the difference between starting your retirement savings in your early 20s versus in your early 30s. In other words: to reach the same retirement income goal, a 30-year-old must save $200 a month more than a 20-year-old. A 30-year-old will not necessarily have the same ability to take off to Cancun for a week every year and still meet their retirement goals.
Of course, it is never too late to start retirement planning.
But starting earlier definitely has its advantages.
Take two of my clients for example.
Justin and Sarah (not their real names, of course!) are 28. The came to me to start their retirement planning, and had a list of other goals they wanted to accomplish:
· Establish an emergency fund
· Pay down their debt
· Create a yearly travel budget
· Purchase a home
· Buy a vacation property
To reach their retirement goal, they would need to invest $800 per month.
Andrew and Georgia (again, fake names!) are 40.
If I took the same goal that Justin and Sarah had and applied it to Andrew and Georgia, they would need to invest $3,000 per month.
That $2,200 per month difference is substantial. That is more than one all-inclusive trip down south. That is a down payment on a house. That is a nice car.
But that number is not accurate.
Why?
Because Andrew and Georgia do not have the same retirement goals as Justin and Sarah.
That is why it does not make sense to start by picking a number for your ideal retirement savings – despite what articles about retirement savings might tell you, it is not as simple as deciding to save $1 million (or any other amount) for retirement.
How much you need to invest towards your retirement savings is completely individualized. The amount you need to save depends on what your individual short and long-term goals are, what your individual incomes are, the amount debt you have, if you have a pension, what age you want to retire at, etc.
Andrew and Georgia actually only need to invest $1700 per month to accomplish their goals. They already had an established emergency fund, a beautiful family home they adore, and wanted to focus more on helping their children with post-secondary costs than on travel.
When they first came to me, they were scared that they had waited too long.
They were scared they could not afford to retire until they were over 65.
They were scared that they would not be able to save for the retirement lifestyle they wanted without giving up every other goal on their list.
But with the right strategies, they can save for a great retirement and go on a trip to Disney, help their kids pay for school, pay down their debt, and renovate their home.
While starting retirement planning early has advantages (hello, beach!), working with an advisor to create a holistic financial plan – one that considers all your short- and long-term goals together – offers the most advantages.
Whether you are 28, 38, 48, or 58 – a financial plan can mean that you can sip margaritas on a white sand beach every year AND retire in style. It all starts by Scheduling a call with me.