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It Is Never Too Early to Plan

Spontaneity can be a lot of fun. But it is the last thing you want when planning retirement. Saving for retirement involves delayed gratification, planning, and discipline, but today's society may find that message difficult to accept. Fortunately, tools such as a 401(k) can make the process less painful because much of the saving happens automatically after you set up the plan. If you are young, you may wonder whether it is too soon to plan for something 30 or 40 years away. The truth is that the sooner you start, the better: your savings will have more time to accumulate through compounding, as earnings on the money in your account continue generating even more money. Starting to save early gives you greater freedom to decide later what you want to do. On the other hand, if you are already 40 or older, you may wonder whether it is too late to plan. The answer is that it is never too late. But you may need to scale back some goals or increase the amount you save each year. By setting retirement goals and developing a detailed plan to achieve them, you will lay out the steps to choose a target retirement date, calculate how much income you will need in retirement, develop a savings plan to achieve that income level, and track your progress as you save over the years.