Late Starter Strategies: 5 Retirement Planning Tips for Those Who Are Late to the Game : Whether you’re looking at a Roth IRA in the US or SMSF accounting services in Australia, retirement planning can be daunting, especially if you’re getting started later in life. It’s easy to feel discouraged when you realize how much compound interest you’ve missed out on, but don’t despair!
Instead, follow the strategies below:
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Focus on eliminating debt
While it is important to have a cash cushion in reserve to cover unexpected expenses, your first major retirement planning goal should be to eliminate any debt you’ve accrued. Exceptions to this rule include “good debts” like mortgages and student loans in countries like Australia (where no interest accrues and repayments are taken directly from your paycheck).
For all other debts, focus on paying off either those with the smallest outstanding balance or those with the highest interest rate. If the numbers work out, you may even wish to consolidate your debts into a single refinanced loan.
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Consider seeking professional guidance
If point one on this list already has you feeling anxious, it may be time to get a financial professional on your side. From paying off debt to establishing wise investments, a Certified Financial Planner (CFP) can offer invaluable guidance. If you can’t yet afford to pay for professional support, start with free resources like The Financial Diet YouTube channel, podcasts like Optimal Finance Daily, and even finance-related subreddits. Just be sure to take all the information provided with a proverbial grain of salt, especially on Reddit.
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Max out your retirement fund contributions
Whether you’re self-employed or working for a company, it’s well worth the effort to max out your retirement fund contributions. This is the best way to catch up on what you missed out on accruing in the past. In many countries, it will also earn you some tax benefits.
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Arm yourself with tools for success
If you’ve been “budgeting in your head” all these years, that’s not necessarily a bad thing. However, you’re bound to have some expense categories that are a far bigger drain on your finances than you realize. To address this issue and make retirement planning more fun, arm yourself with a suite of financial tools.
Start by finding a budgeting app or platform that suits your style. If you live with a partner, family, or housemates, consider an app like Splitwise to help you track shared expenses and accurately divide bills. From here, explore the other options available and develop your perfect personal finance toolkit.
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Prioritize your health
This may sound like an odd recommendation in a finance article. However, it could be the most important piece of financial advice you ever adopt. By looking after your health now, you’re investing in your future and ensuring you’re less likely to run into expensive medical issues in the future.
For example, visiting your dentist twice a year for a check-up and cleaning can prevent cavities from forming. This can save you hundreds of dollars on fillings and potentially thousands on crowns, veneers, and root canal surgery.
Similarly, regular check-ups with your GP can help you avoid costly lifestyle conditions like obesity, hypertension, and type 2 diabetes. This is especially true if you exercise, maintain a healthy weight, eat well, and avoid smoking and excessive drinking.
Keep these strategies in mind as you correct your financial course, and most importantly, don’t get down about the fact that you’re starting now. As the saying goes, the ideal time to start retirement planning is when you land your first job – the next best time is now.
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