4 Reasons Budgeting for Retirement Is Important for Anyone

Some people can start budgeting for retirement in middle age – ten, fifteen, or twenty years before retiring – and end up just fine. But most of us should probably start sooner.

Too many folks either avoid the topic or think about it wrong. Who can blame them? It’s common to turn it into a math problem, where you’re trying to anticipate how long you will live (impossible), when you will retire (not always predictable), and what health ailments you may face later on (also hard to know).

Below are four key reasons to start saving for retirement sooner rather than later.

1. Life Is Unpredictable

It is always good to have a sense of the cost of living where you live. However, what you don’t want is a headache and a lot of retirement budgeting confusion that doesn’t lead you to start saving.

Instead, what can be helpful and bring more peace of mind is to simply start setting aside a small portion of your money to build a retirement fund, especially if you don’t have a steady job with a 401(k). This way, you’re not racking your brains to predict the future. Avoiding things you can’t afford now to put a few extra dollars toward your future will help you stretch those savings when you eventually need them, something even wealthy people can overlook.

2. Budgeting Helps You Get the Right Home When You’re Young

Financial experts always say it’s best to retire without a mortgage. While not always possible, owing too much on your home or other large expenses may cost you later. If you’re 30, you might think retirement sounds like a whole lifetime from now, and you would be right. You want a nice home now!

How are the two things related? Because millions of Americans over 65 – including those well past retirement age – still owe money on their homes. What this really means is that they don’t entirely own their homes, even after all those years of living in it. Whatever bank they make those mortgage payments to technically still owns part of that condo, house or townhome.

3. To End Up with Smaller, More Manageable Mortgage Payments

You’re almost always better off making space in your budget for smaller, more manageable mortgage payments, if you decide to go that route. It’s the same with grad school or a fancy car: Ideally, you don’t want to retire owing money on it. What happens with lots of families and couples is that they get caught up in the idea of the perfect home, thinking they’ll have the rest of their lives to pay it off. However, even if you do end up in that house for life, you’re still better off paying off the mortgage before retiring.

4. To Avoid Debt That You Can’t Afford Later

Most Americans carry some form of debt. It’s hard not to! Especially in a society that encourages us to get credit cards and actively promotes buying things we can’t really afford.

But paying it off becomes harder if you don’t end up with the salary of your dreams or if unexpected expenses derail your plans. When that happens, many people are tempted to tap into their 401(k) or contingency funds. If you’re not saving up for retirement at all, then you might end up depleting your emergency fund to cover common expenses due to an illness, a car accident, or to help out a family member.

Visit Your Local CCEA Currency Exchange for Helpful Financial Services

Everyone deserves peace of mind in retirement. What you’re aiming for is to have no debt when you get there, or as little as possible, since you will no longer be making money and it will be harder to find ways to pay it off. Savvy money habits like spending within your means and paying bills on time can help you feel unburdened right now.

Currency Exchanges (CCEAs) throughout the Midwest are packed with simple ways to manage daily expenses, including auto-related ones. Check out your nearest CCEA location to find out more today!