So of course, we have to kick things off by saying Congradulations to all of you wonderful college graduates.
Now, unlike when you graduated from high school, graduating from college is an entirely different beast because now you are truly starting your life outside of the constant routine (and restraint) of formal education. In other words, you finally have the freedom to do whatever you want whenever you want. This means you are going to be making some very important decisions that will shape your future. (To be fair, by now you’ve already been making some pretty important decisions. ie. loans, relationships, voting, housing, employment, etc.)
With that said, there’s one major decision you should be planning for right now…
Your Retirement!
Now, you may be thinking retirement? I haven’t even found my dream job yet. Or maybe you just started a position. All fair concerns. However, to you I say, it's never too early to begin planning for your retirement.
Despite misguided public perception, planning for retirement isn’t an old person thing. Here’s a question for you to consider:
1. Do you want to work until you die?
That may sound like a silly question but I'm truly being serious. Do you want to work at a job for the rest of your life?
Probably not.
However, that’s exactly the predicament the majority of people put themselves in by not properly having a retirement plan.
There are a number of reasons why people retire. For example, maybe you retire because you don’t want to be the old person at the job anymore, maybe you want to spend more time with family, maybe you’re tired doing the same thing every day or the stress...whatever your reason, by simply having the mindset that you don’t want to work until you die, you’ll be better prepared to actually retire on your own terms.
2. How do you envision your life in retirement?
Now that we have established that you do want to retire at some point in your life the next question you must ask yourself is how do you want your retirement going to look.
For this exercise, I want you to imagine you’re on summer vacation but instead of being twenty something you’re say…sixty-five years old. What type of things would you do?
- Are you someone that likes to travel?
- Would you play sports like golf or pickleball?
- Would you like to start a business venture?
- Finally get that dream car or drive new cars every year?
- Or maybe you’re a homebody and would like to just relax in your abode.
Thankfully, there’s really no wrong answer. Just like the Black Sheep song states “the choice is yours”.
Frankly, it may be hard to predict your future interests as your life will be filled with various experiences from now till then; however, having some general idea of your interests can help shape your retirement saving plan.
Which brings us to our final and most important tip:
3. Understand how retirement plans work
Despite the general public's reliance on it, social security is not a retirement plan. As a matter of fact, there’s always [ongoing] talk that social security may not last much longer (to be fair they've been saying that for decades but you never know).
This means that if your retirement is simply relying on social security than you don’t have a [good] retirement plan. Luckily, many jobs offer retirement plans as terms of your employment. However, (if you are really discipled) we recommend having your own retirement plan from a financial institution of your choice.
No matter what option(s) you select there are many different types of retirement plans available to you.
Here’s a simple list below:
- 401ks
- IRAs
- ROTH IRAs
- 403B
- Pensions
- Profit Sharing Plans
- SEP Plans
The one that’s best for you (like every financial product) will be dependent on your lifestyle and tax situation. However, regardless of the retirement plan you have you should always understand how it works. For example:
- What are the contribution limits?
- What are the qualified distributions?
- Are there any tax implications?
This information can change periodically so you should always review your retirement plan at least annually.
Long story short, as a college graduate you are primed to pursue the next chapter of your life. From relationships to becoming a homeowner there are plenty of decisions you will make regarding your future. One of the best decisions you can make is planning for your retirement now. By following our three tips above you will get in the right mindset to begin the process and truly secure your future.
Curtis Tillman
Such a fresh perspective, I hadn’t considered this before.