Smart Retirement Planning For Every Age

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

is a must. As interest rates continue to rise, consider consolidating student loans. There is also a congressional proposal to change the consolidation program from a fixed interest rate to a variable interest rate as of July 1, 2006.

Join your employer’s savings plan. A big part of getting ready for retirement is participating in your company’s retirement plan. Join as soon as you are eligible. If your employer matches employee contributions up to a certain percent, take advantage of that by contributing at least that percentage of your own earnings. And if you’re thinking about changing jobs, timing is critical. You might want to think twice about leaving your job before you are fully vested, or in other words, until you have been at your job long enough to take all of your retirement plan earnings with you when you go. A situation may arise where you have to leave a company before you’re vested—having to relocate because of a spouse’s promotion, for example—but otherwise, try not to leave money on the table.

Be choosy with credit. Many people in their 20s are building credit for the first time, but many are also rebuilding or repairing it. If you are thinking about applying for a new credit card, choose one with a low, fixed annual percentage rate. If you already have one, contact the issuer to see if it is possible to get a lower APR, Wright says. (This may not be done so easily with store cards.) Another way to manage credit card debt is to pay as much above the minimum payment as possible, on time, each month. Optimize credit card payments by paying the card with the highest interest rate first.

Fix your credit report. The credit report is the grown-up’s report card. Review it for errors and any signs of identity theft. You can get a free one every year at www.AnnualCredit Report.com.

Companies now are looking at job applicants’ credit reports, especially if you’re in the financial services arena or will be handling money. Also, when you go to buy your first new car, or even when you fill out an application for an apartment, your credit report will likely come into play.

Set realistic goals. Whether you wish to return to school, change your career goals, or buy a home in a few years, it is important to have realistic retirement g
oals because they will influence your saving and investing, says Wright. All of these life changes will affect your retirement. For example, if Spencer wants an income stream of $5,000 per month until age 80, and he retires at 55, he would have to save more than $11,000 a year, assuming an average annual rate of return of 10%. “That isn’t realistic since it’s over 30% of his base salary,” explains Wright.

Dump bad habits. Don’t be tempted to spend beyond your means. Getting your first job often coincides with buying a new wardrobe and can be closely followed by moving into a new apartment. Even a

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