It’s Never Too Early to Plan for Retirement

Congratulations, you’ve done it! School is over, and you’ve accepted your first professional position. Ready to plan for retirement?

Silly question, right? And it’s a bit of a buzzkill to interrupt the excitement of new possibilities with talk of getting ready for the end of your career. Yet, as the cliché goes, “Failing to plan is planning to fail.”

Why Plan for Retirement Now

It’s totally understandable if you find it overwhelming to plan for retirement as your career is just beginning. It’s also totally understandable if it’s difficult to find extra income to put toward something so many years away. After all, your present is difficult enough, what with the seemingly endless demands of things like college loan repayment, rent and living expenses. However, letting current concerns prevent you from looking forward can be detrimental to your financial future.

It’s Good to Be Young

Daniel Darling

Here’s the beauty of creating a financial plan at your age: a little can go a long way. Saving as little as 1% of your income in your new employer’s 401(k)¹ or some other retirement account can pay off big down the road. “That’s because you’re letting time work for you,” said WoodmenLife Senior Sales Manager Daniel Darling, “and money can add up nicely over 20, 30 or 40 years.”

Karla Gochenour

WoodmenLife Vice President of Human Resources Karla Gochenour also emphasized the importance of letting time work in your favor.

“It is a generally accepted principal that someone waiting until around age 40 to invest will need to contribute 3 to 4 times more monthly to get to the same amount by age 60 as someone who started around age 25,” Gochenour said.She also touched on the problem of little leftover cash young professionals encounter, adding it’s imperative they take advantage of their employer’s 401(k) program.

“Never turn down free money,” Gochenour said. “Contribute at least the amount that provides you with the maximum employer match.”

If retirement planning still seems like something you can’t afford, Gochenour has more insight.

“I would strongly recommend at least trying to contribute 1% to 3% for a couple of pay periods,” she said. “Then, you can see the impact to take-home pay. In my experience, the difference is minimal, because deferrals can occur on a pre-tax basis, and generally this helps reduce the impact to take-home pay.

“Most plans offer the flexibility to change your deferrals frequently, so you can reduce or stop your contribution if the impact to your take-home pay is more than your budget can tolerate.”

Look Into the Crystal Ball

Ultimately, Darling said, your present self needs to look at your future self and determine what you want your life to be like when you’re no longer working. What is your targeted retirement age? What do you want to be doing? Where do you want to be going? Where will you be living? What don’t you want to be worrying about? Planning for retirement now can help ensure you have the nest egg you need to give you the best answers to these questions.

1. 401(k) not offered as product. Products offered are IRA variable annuities, IRA fixed annuities and IRA mutual funds.

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