Planning For Your Financial Future – Road to Retirement!

Road to Retirement!
Road to Retirement!

It’s inevitable that you will retire one day. Whether you retire early or wait until your ‘golden years’ to retire, we all need to develop a plan to secure our own comfortable retirement. I’ve seen a lot of stories recently that most people are not prepared for their future. They spend beyond their means, take on too much debt, and choose not to plan ahead for the future.

There are many ways to secure a comfortable financial future for yourself. It takes a little bit of planning and thoughtfulness, but anyone can start today.

Start Planning!

The first thing you need to start on the road to retirement is creating a written financial plan. This will help you understand your current financial net worth (all your assets less debt), your goals for the future (short and long-term), and provide a guide as you head toward retirement and track your progress.

Know Your Net Worth and Expenses

Your personal net worth is calculated by taking all of your assets and subtracting any debt. Assets include cash, investments, retirement accounts, house, car, and any other property or assets you own. Debt is any money that you owe to others including your mortgage, car loan, student loans, and credit cards. Some people may find that their net worth is negative if you have a lot of debt and very little owned assets. Therefore calculating your net worth can be an eye opening experience that will help kick your butt into gear to start saving for your financial future.

A great tool to use for tracking your net worth (and the one that I use) is Personal Capital. You can use Personal Capital, to track all of your bank and investment accounts, credit cards, and even your mortgage, car loans, and home value.

In addition to calculating your net worth for you, Personal Capital is a great source for tracking all your expenses as well. Understanding your expenses, creating a budget and tracking your expenses is a critical component of knowing your financial security. Learn how to start tracking your expenses with small steps using my post here. It’s important to know how much your spending to figure out how much you will need in retirement.

Determine Your Goalssetting financial goals

When do you want to retire? Do you have any big purchases you want to make? What about marriage, kids, or vacations? Determining your goals is imperative in the planning process.

Once you’ve determined where your finances are currently (your net worth) and identified your personal retirement goals, creating a sound financial plan for retirement becomes much easier. You can start to “pay yourself first” by carving out a portion of your income to save for retirement and other financial goals.

When you have identified goals, you will find that it is much easier to persevere through difficulties, failures, and opposition. When you have a goal, it is easier to continue moving forward in spite of any obstacles since you can see the light at the end of the tunnel that will guide you. Identifying distinct goals is an important visualization in your financial journey.

Tips to Create Financial Goals

smart financial goals
Create SMART financial goals.

In developing financial goals, it is important to have knowledge of where you are starting from. How much do you have in savings? How much are your spending? What do you want to do in retirement? These goals become your focus when creating an action plan to achieve the type of retirement you desire. As you create goals and an action plan, you can keep a few things in the back of your mind:

  • Know your monthly budget! Create a line item in your budget to pay yourself first. This creates an easier way for your to save $100 or more every month.
  • Understand needs versus wants in your budget. If you need to save more, you can reduce spending on the ‘wants’.
  • Should you (or can you) max out your 401k or IRA contributions? Saving money in your retirement accounts is often easier for people to do, and there are large tax benefits to doing so.
  • Diversify your investments. Depending on your age, you can look at being more or less aggressive with the investments you have.
  • Pay down your debt, including your mortgage. Reducing debt as you head into retirement will give you a huge advantage.
  • Will you delay social security? You can delay taking social security and receive a larger monthly check if you do.

The less you spend now, the more you can put into saving for your financial future. Make a commitment to yourself to achieving your goals. When you are able to control emotional spending, you know how to balance wants from needs and use your head rather than your heart to make financial decisions (no matter how small).

Financial Confidence Leads to Financial Independence

Save Aggressively, Save Early
Save Aggressively, Save Early

My desire to achieve financial independence was driven by a desire to have freedom; freedom from knowing I didn’t have to work if I didn’t want to. I find the never ending cycle of going to work every day depressing, and therefore I set a goal for myself to save as much as I could, as early as I could. It’s not an impossible goal if you develop a plan to get there. The earlier you start saving, the easier it is to achieve financial independence and the ability to retire early.

Although financial confidence tends to increase as we get older, having a written plan with goals and an action plan will greatly assist along the way. As we begin to feel more secure in our ability to meet financial responsibilities, we will also feel more confident that we will be able to retire comfortably. Financial freedom gives us the confidence that we are prepared for any emergencies like job loss, medical care, or home and car repairs, as well as the ability to pay all the bills every single month.

The Future Is Closer Than You Think!

Prepare now for your retirement! Consumerism in AmericaDon’t fall prey to Consumerism in America and spend beyond your means, take on too much debt, and not to plan for the future. I touched on many different ways to help secure a comfortable financial future for yourself. It takes planning, it takes thoughtfulness, and it takes action, but anyone can start today.

Hopefully I have spurred some new thoughts in your head to help you start planning for your financial future. Enjoy the journey! Never give up! The future is yours, so make them the best years of your life by creating a plan today!

Have you started creating a financial plan for your future? What are your top goals for your future? Share your comments or questions below.

6 thoughts on “Planning For Your Financial Future – Road to Retirement!

  1. I am currently in the early stages of my retirement planning. My wife went to an expensive college so we do have college debt to pay off. It makes it harder to look at our net worth when we know it is in the negative. I am excited to begin working a quality job and be able to begin to cut down on our debts and see our net worth going up.

    1. It really is exciting to see your debt go down and your net worth go up. I paid off my mortgage last year and it was such a great feeling. Keep going, I know you can do it! Good luck and blessings! ~Jen

  2. Very thought-provoking article. I myself am 32 and am hoping to pay off our house by the time I’m 40 (a pretty big goal). We didn’t go overboard on our house and got it for well under $100,000. We’ve also gotten rid of all of our other debts and are living what I see as pretty frugally. My wife stays home to raise our son. While we are getting by, I’m not really sure I can both meet my goal and save up for retirement at the same time. Any suggestions?

    1. That is an awesome goal and one that I think is completely achievable if you set your eyes on the goal now and work continuously towards it. All it takes is a little momentum and once you see your mortgage go down and your net worth start to climb, you will be even more determined to see yourself succeed. One thing that can definitely help you save more while reducing debt is finding a side hustle that is profitable. You can check out my post on side hustles, like starting a blog or doing side work (using your skills to help others). Again, great goal to have and good luck in your continued success!

  3. Thank you for a very informative post. I consider myself to be very financially savvy but it is always good to read an article that pulls you back into line. I know how to differentiate between needs and wants but over time the wants start to creep back in when I’m not looking. My only debt is a mortgage as I cut up my credit card about seven years ago and haven’t looked back. If I haven’t got the money for something I don’t buy it. At the moment the kids and I are saving to do an overseas holiday within the next couple of years. We don’t spend any coins or $5 notes and the money is building up! However, you’ve reminded me to do another audit of my budget and retirement plans.

    1. Hi Megan – I’m happy to hear that my post gave you a little reminder to take a look at what you spend money on and help prepare you for retirement. It’s so helpful to take another look at what we spend because, like you said your wants can slowly start to creep back into your budget and take a huge bite out of it if we aren’t careful. Thanks for your comment and good luck to you! ~Jen

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