Why Retirement Planning Is an Important Part of Your Career Journey

For many people, the COVID-19 pandemic placed a spotlight on retirement planning. Many families were forced to dip into their 401(k) or individual retirement account (IRA) plans to pay for bills. With all the uncertainty the pandemic brought, others focused more on what they had to deal with in the moment rather than long-term investments.

A 2020 survey by Edelman Financial Engines, of 2,000 American adults ages 40 to 65 years old with an annual household income of at least $100,000, found:

• 35% said they didn’t have enough in cash reserves
• 78% wished they had started saving earlier
• 25% of pre-retirees have reduced the amount they’re saving for retirement as a result of the pandemic

A 2018 poll by Gallup found 46% of U.S. non-retirees say they won’t be financially comfortable when they retire. A 2020 study by Voya Financial found 54% of employed Americans plan to work in retirement.

If you want to retire earlier, you must make retirement planning a part of your life and career strategy. Here are some tips for prioritizing retirement planning.

Take Advantage of Employee Retirement Plans

If your employer offers a retirement plan like a 401(k), it pays to divert a portion of your paycheck to your retirement savings. Make your contribution automatic so you don’t have to think about it. Use whatever’s left over from your paycheck to budget with. Make sure to commit to staying within those means so you’re not tempted to lower what you’re contributing.

Some employers will offer a 401(k) match. That’s where an employer will match a percentage of your contributions, or match your contributions up to a certain dollar amount. It’s free money just for making your own responsible contributions.

Retirement plans are a big selling point for employers. If you’re currently on the job hunt or anticipate you will be soon, enquire about employer retirement plans and matching options. Try to have a retirement savings goal in mind for each paycheck. If your employer matches, that can offset what you’ll have to contribute.

If you’re self-employed, look into opening up a retirement account like a Roth IRA if you don’t yet have one. You can also create an individual 401(k), also known as a solo 401(k), to save even more toward retirement.

Build Up Your Emergency Fund

Another Voya Financial study, reported by the Society for Human Resource Management (SHRM), found individuals who don’t have an emergency fund of at least 3 months’ worth of living expenses are 13 times more likely to dip into their retirement plans to cover emergency expenses. If you want to protect your retirement savings, it’s important to make saving in general a priority.

Some tips to build up your emergency savings:

• Identify any subscriptions or recurring purchases you don’t use or could do without. For example, you could eliminate a streaming subscription or work out at home instead of paying for a gym membership. Then put those savings toward your fund.
• Cook more at home instead of eating out. Buy groceries instead of using a meal kit. A report by “Forbes” found it’s almost five times more expensive to order restaurant delivery than to cook at home, and almost three times as expensive to use a meal kit.
• Look for extra earning opportunities. Since an emergency fund is so important, it might be worth putting in some extra work to secure yours. If your skills translate to freelancing, you might offer your services on the side. Maybe you have a talent that could turn into a product you could sell. You might also consider selling items you no longer use.

Also, it’s very important to budget and keep track of your spending. Review your spending habits each month to identify costly patterns. Identify where you can make tweaks, and put away any money you save into your emergency fund.

Start Sooner Rather than Later

One of the biggest advantages to retirement planning is that investments create compound interest. The more money you make, the more you have the potential to earn in interest. If you don’t yet have retirement savings, start a plan today, even if you start with a small amount.

Remember that most people say they wish they had started planning for retirement sooner. If you need assistance, work with a financial planner. Some expert help can be a good investment, so you can get organized and get tips to stay on track.

Stay motivated to save by visualizing what you want life after retirement to look like. Write out your goals. The future may seem far away, but planning for it now can help you achieve what you want post-retirement.

Find a Job That Helps You Meet Your Retirement Goals

Your career’s about more than making you happy now. Ultimately, where you work should also support your future. If your goals include retirement planning, that’s important to consider when you’re searching for a job.

If your current job doesn’t support your retirement goals, or you’re currently on the search for a new job, we can help you connect with employers that align with your goals. Learn about our job seeker programs and contact us for a free consultation.