Smart Retirement Planning For Every Age

Solid planning and the right safety net will ensure that you enjoy your golden years

got a good start, but his college years came with a price. He owes about $19,000 in student loans and, after consolidating them, he’s paying them back at the rate of about $108 a month. He didn’t work while he was in NYU and relied on credit cards to cover some of his school expenses. Consequently, he has about $4,000 in credit card debt. Spencer also admits to having a “bad shopping habit.” He’s got a thing for clothes but says he’s a smart shopper. “I know quality and I get good deals,” says Spencer. His other fetish is movies—he has more than 200 DVDs and his collection is growing.

Spencer the Spender will have to turn into Spencer the Saver if he is to reach his goals. He would like to go to graduate school in a couple of years and, in the not-too-distant future, explore job opportunities in film or television. He will likely take a pay cut if he gets a more creative job, and he will need to be sure he can afford to do that and keep his debt under control.

He’s already looking down the line to the day he can kiss the 9-to-5 goodbye. “I don’t know that I would want to ever fully retire, but I would like to be financially secure by age 55,” says Spencer, who defines financial security as having the ability to travel and not worry about how to pay the bills. “Right now, I wonder if the dollars I’m saving will go far enough in the future. My grandparents saved and made good decisions about money so they are alright in retirement. My mom is approaching retirement age and, while she has some things in place on her own, she may be looking to me to help take care of her. It’s tough because when you think you’re somewhat prepared, there’s always the unexpected.” He adds, “I think retirement is harder than it appears. I want to be in good shape when I get there.”

FINANCES in your 20s:
Like Spencer, many people in their 20s have a job they want to use as a stepping stone to further their career, are still in school, or are looking to go back to school for a more advanced degree. Job instability can make it hard to commit to a retirement strategy, but Jocelyn D. Wright, a financial adviser with Wealth Development Strategies L.P. in Houston, offers several ways to start saving for your retirement goals.

Welcome to budget living 101. Priority No. 1 is creating a budget. “You need a budget to set parameters on spending,” says Wright. It’s likely you will be holding down your first full-time job, and a budget will help you adjust to having a regular income.

Think “save,” not “spend.” A budget will also help you set aside some money to save and limit your credit card use. Build an emergency fund of at least three to six months worth of living expenses.

Pay down debt. Accelerating debt reduction

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