4 Smart Strategies for Retirement

It's easy to think about retirement as something far off that doesn't affect you today. But if you don't plan strategically for retirement now, you may not have enough to support yourself as you age.

Below are some smart strategies to keep your retirement planning on track:

Strategy #1: Go long!
Most people are more concerned with the next few months than the years and decades to come. It's easy to focus on the immediate issues of paying bills and expenses, but short-term thinking won't help you down the road.

Long-term thinking begins with the future and works its way back to the present. Picture yourself at 70, 80, and 90. What will your needs be at that age? What would you like to be able to do? Once you figure out your goals for retirement, consider what you should be doing now to prepare for your future. To help with this goal, we've provided various calculators to help determine how much you will need to save for retirement.

Strategy #2: Avoid cashing out
One of the biggest mistakes you can make is cashing out your retirement plan when you leave a job. While it can be tempting to simply cash out your retirement, an early withdrawal can really hurt your saving strategy. Not only does cashing out reduce your savings for the future, but there are financial penalties for early withdrawals. If you take money out of your retirement account before age 59½, you will have to pay a 10% penalty. Forty-five percent of people who switch jobs before age 59½ cash out their retirement plans, and while many may intend to return the funds to their accounts, life often gets in the way and prevents them from doing so.

The better option is to roll your retirement account from a previous job over into your new qualified plan or IRA. This way, you don't lose any of the money you have saved up for the future, and it can continue to grow, along with your new contributions.

Strategy #3: Know your risk level
Saving for retirement is not something you can accomplish overnight. It takes planning, determination, and commitment. It may sound appealing to jump on the latest promising investment, but doing so can do you more harm than good.

Before making a decision to invest simply for higher returns, seek the advice of a financial professional. It's important to remember that higher returns are generally accompanied by higher risk. Know your financial goals and how much risk you're personally willing to take, so you can develop an investment portfolio that matches your tolerance for risk.

Strategy #4: Prioritize savings, then debt
Eliminating debt is an important part of developing financial stability, but it's only one piece of good financial management. Many people feel that they can't work on saving money until their debt is paid off. But unfortunately, most people end up not saving the extra money in their budget once their debts are eliminated. To create a strong foundation, balance your savings goals while eliminating high interest debt.

Saving for retirement can be a daunting prospect, especially when those years feel so far away. But if you shift your short-term thinking to long-term thinking and make saving a priority, you can take the first steps on the path to financial stability. Your future self will thank you.

Article originally posted here on the AG Financial Solutions website.