Do you know what age most Gen Zers would like to retire at? GOBankingRates recently surveyed 997 Americans aged 18 and older on the topic of retirement. When asked what age they would like to retire, 20% of Gen Zers said they planned to retire before they were 55 years old.
Retirees are eligible to start claiming Social Security at age 62. If you are among the Gen Zers who want to retire before they turn 55, what should you focus on right now?
Establish Goals and Develop a Plan To Achieve Them
No matter what age you plan to retire at, it’s critical to establish goals and develop a plan to achieve them. The keys to success in retirement, said Heather Winston, CFP and director of financial planning and advice at Principal Financial Group, are developing goals, prioritizing them and creating consistent behaviors and positive habits to make savings dreams a reality.
“We see those who follow a mantra of saving regularly and spending wisely, while protecting their assets and lifestyle along the way, tend to have a greater sense of certainty and financial security throughout their retirement years,” said Winston.
Start Saving Early
Per the GOBankingRates retirement survey, 62% of Gen Zers are already saving for retirement. Saving early, even if retirement feels like it’s still years away, not only allows us to save more toward this long-term goal. It enables us to prioritize this goal and see it a bit more clearly.
Winston said people who establish the positive habit early on in their careers build confidence and sustain those positive habits over the long term. The most successful retirees, said Winston, are thinking about additional ways to save and build wealth as they get closer to retirement, whether they are considering part-time work or delaying collecting Social Security.
Pay Down, or Off, High-Interest Debt
One common money move retirees never regret is eliminating debt before retirement. Getting out of debt enables you to earn interest rather than pay interest and helps prepare you to make a smoother transition into the next chapter.
While Winston said it’s unrealistic for many Americans to be 100% debt-free throughout the years leading up to retirement, most retirees who enter their retirement years without carrying a lot of debt cite this as an attribute they did well.
When you can, focus on paying down or paying off any existing debt like student loans, car payments or mortgages. If you need some help, Winston recommends taking a balanced approach. Be careful to manage good debt effectively. Do not let it get out of control and ensure you remain in control of where your money goes.
Max Out Employer-Sponsored Retirement Plans
Gen Zers who work for companies which offer employer-sponsored retirement plans, like a 401(k), must take the opportunity to max out their contributions. This is especially true if your employer is willing to match your contributions.
If you plan to retire at 55, you’ll need to begin maxing out your 401(k) early and continuing to prioritize the maximum contributions throughout your working career.
Anticipate the Unexpected
Think about how a boxer prepares to step into the ring. The boxer practices when to bob and weave, when to throw a punch and how to absorb one.
Winston said savers are most successful when they are able to anticipate their potential future needs and then take action to feel prepared. This can mean anything from tucking money away into an emergency fund once a month or investing in life insurance before they think they really need it.
“Whether we are talking about emergency savings, rising healthcare expenses or various forms of insurance, retirees who look back with no regrets often cite they did everything in their power to prepare for life’s curveballs before they hit,” said Winston.