Congratulations if you have landed your first job, purchased your first home, or married your sweetheart.
Even if only one of these scenarios applies to you, it is not too early to begin planning for your future.
With that in mind, here are 10 tips from Jerry Vahl, an insurance sales professional at AmeriLife, on how to prepare for life after you stop working.
1. Pay yourself first!
We are talking about YOUR money here.
“Don’t just spend it all on bills and having fun,” Jerry says. “Pay yourself first.”
This can include tucking a percentage away in your company’s 401(k) account – which the employer will often match.
“It’s free money,” Jerry notes.
“Do not pass it up!”
2. Write down your goals
It sounds simple, right? Yet many people don’t do it.
“Study after study finds that by putting your goals on paper, you increase your chance of success,” Jerry says.
“Don’t overthink it – just say what you feel. Your goals will change over time and you can adjust accordingly.
“Write them down now. Trust me.”
3. Save early and often
Did you know Albert Einstein once called compound interest “the eighth wonder of the world”?
Jerry is a fan of dollar cost averaging.
According to Investopedia, this is when you invest a fixed amount of money in the same fund or stock at regular intervals over a lengthy interval.
If you are contributing to a 401 (k) plan at work, you are already doing it.
4. Get a Roth IRA
Compared to the traditional Roth 401(k) and IRA accounts, this financial instrument will set you up to receive your future retirement income tax-free.
Who doesn’t love tax-free?
You have heard the old saying, “Do not put all your eggs in one basket”?
Well, it’s still true.
When planning for your future, building a personal budget is a great starting point.
Jerry says over the course of his career, “I have only met a few folks who love to budget their spending.
“We all need to know that spending less than you make is the key to happiness.”
7. Overfund life insurance
This is when you pay into a policy more than the value of the premium.
The purpose is to maximize the cash value and enjoy tax-free status as it grows.
“This protects your family by providing income for your spouse if you’re no longer there,” Jerry says.
“When properly structured, overfunding may also create an important supplemental source of retirement cash flow.”
8. Tune out the noise
Ignore others bragging about their big investment successes.
“If they won, it’s likely too late for you to jump in,” Jerry advises.
“Plus, nobody talks about their big losses!”
9. Avoid debt
Forget about keeping up with the Joneses.
“They are likely to be the ones in bankruptcy, anyway,” he notes.
10. Keep learning
“Be in a position where people pay you for what you know, rather than for the time you give.”
AmeriLife offers a broad variety of retirement planning resources and solutions for people at all stages of their lives. Learn more
Do you have any clients in their 20s and 30s?
Share these 10 tips about how they can get started saving and keep the momentum going.
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