It’s never too early to start planning for retirement, but there are key stages in life where it’s a good idea to review your retirement plan and see if you need to make any adjustments. At any significant life event it’s a good idea to reevaluate your plans for retirement and see if the changes will accelerate or delay reaching your goals.
Also be sure to ask yourself if you feel comfortable with how much you have in savings, how much life insurance do you need, and do your spending or savings habits need to change?
Here are some common life events where you should review your plans for retirement:
When you get a new job
With a new job comes new income and potentially a new retirement savings opportunity. If your employer offers retirement savings such as a 401k, that means both you and your employer can contribute to the retirement account, and you’ll get a tax break on the money you contribute.
If your employer doesn’t offer a 401k, you can also look into an individual retirement account (IRA) which offers a similar structure and benefits. In any case, the more you are able to save, the sooner you should be able to retire.
When you get life insurance
When you’re ready to start looking into life insurance, be sure to consider all of your options. Term life insurance is a great tool to offer temporary protection for a predetermined amount of time, whereas permanent life insurance can provide a death benefit and also come with a cash value component that can be used to supplement your retirement savings1. This is due to the fact that it’s designed to provide lifelong coverage and many types of permanent life insurance offer cash value features.
When you get married
When you get married, you are starting a new journey in your financial life with a partner. That means you’ll be able to share financial burdens as well as rewards, and retirement can be a goal that you work towards together with your spouse.
How does their income and financial needs affect your plans? Are there ways working together can help you reach your goal faster? These are all considerations to review with your partner so that you are on the same page.
When you buy a house
Mortgage terms can span the course of multiple decades, and when you’re ready to retire it’s usually ideal to have all debts paid off. That means any time you take out a mortgage you should review your finances to see if you’ll be able to pay off the mortgage in time for retirement, or if you need to make any adjustments to when you plan to retire.
The bottom line
You can start planning for retirement at any age and any time. The key is to review your plans for retirement at key life moments, and make any necessary adjustments as you go. The more you prepare the better chance you’ll have of being able to stay on track to reach your goals.
1 The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.