Should You Start Planning For Retirement Right Away?
Only 56 percent of employees were enrolled in a workplace retirement plan in 2021, according to Annuity.org. That’s out of 72 percent who had access to actual retirement benefits. This disparity is something that needs to be remedied, but much of the effort there needs to come from individual employees’ own initiative. Before dreaming about post-retirement trips, one first needs to make robust retirement plans. But is it truly advisable to start planning for retirement as soon as possible?
Planning For Retirement as Soon as Possible Offers a Wealth of Advantages
The first advantage to planning for retirement early is becoming more skilled at living below your means. This entails staying on top of your spending by taking full account of your transaction records, making use of spreadsheets and apps to track cashflow. Aside from enabling you to build up your retirement fund sooner, this also fosters good saving habits which can serve as a buffer against financial trouble. Without the safety net of skillful budgeting, any serious monetary difficulty can push back your retirement by several years.
Being more budget-savvy also opens up pathways for more advanced financial literacy. Having a substantial amount of savings essentially requires you to gain a better understanding of compounding, good debt versus bad debt, and other concepts. You’ll also become more familiar with your employee benefits and the best way to take advantage of them. Making good use of benefits saves you a lot of money throughout your career, thus letting you build up retirement savings even faster.
Once you’ve built up a sizable amount, you can also start looking into effective investment options to add even more money to your retirement account. For example, you can establish gold IRAs or individual retirement accounts by transferring or doing a rollover from your existing retirement account. This enables you to store your funds in a more secure way by having precious metals in your retirement account, and shielding it from periods of inflation and other forms of economic turmoil.
Laying Retirement Retirement Plans Too Early Does Have Its Cons
You might think that there are no disadvantages to planning for retirement early. This isn’t entirely true. For one thing, adding retirement plans as another concern to account for can put a strain on your mental health. This is especially the case if you’re currently in dire fiscal straits, or are still in the process of building your financial foundation. Having to wrestle with an added monetary concern can harm all aspects of your health, and subsequently, your work. 59 percent of workers report that financial stress is their primary stressor at work, and those afflicted by it have been found to be 20 percent more likely to experience migraines and other adverse effects.
Putting yourself through that as you’re still stabilizing your career is not particularly advisable if you have a stressful job. Unforeseen complications, such as economic downturns or hostile takeovers, can throw off your plans that you would have to scrap them entirely, potentially wasting years of effort. However, these reasons are not necessarily enough evidence to discourage early planning altogether. If you can keep these cons in check, you can still enjoy all the benefits of a well-planned retirement. But if you’re currently juggling a lot of other worries, adding retirement plans on top of that can be one of the least helpful things you can do.
Consider all the variables
Although it is ideal to start building your retirement plan as soon as possible, there are myriad variables that could interfere with even the best-laid plans. Your health and obligations to your family are primary factors to consider when planning out your retirement. The best course of action would be to arrange a fluid plan that can stand up to the sudden shocks that are all too common in life. You can always solidify this later as you’ve gained more financial security and have established buffers against any negative eventuality.