Though retirement is far in the future for many of us, it is never too early to begin planning. There is uncertainty surrounding the future of Social Security and other retirement benefits, so the best thing you can do is create your own plan.

The earlier you start, the more money you will be able to accumulate over time. Estimating the savings needed for retirement begins with your lifestyle and the expenses you expect to incur after retirement. Common examples of expenses include utilities, increasing health-care costs as you age, travel, taxes, insurance, and children/grandchildren’s education.

Estimating these expenses will help you better plan for the amount of income you will need after retirement to support your lifestyle. Other factors that play a role in this estimation are your intended age of retirement, life expectancy, and amount of support necessary for your family.

Also, keep in mind the cost of living will be higher when it comes our generation’s time to retire. The annual inflation rate has been approximately three percent over the past 20 years. We can expect this to continually play a role in the increased cost of living into the future.

How to start preparing:

·       Estimate your core expenses. These can include rent/mortgage, loans/debt

·       Determine the type of lifestyle you want to maintain

·       Create a budget regarding your finances taking income and expenses into account

·       If you have extra income, start thinking about opening an Individual Retirement Account (IRA).

Why is this important?

After retirement, your paycheck becomes what you have saved. Starting early should lead to more savings, which will allow you to have a more comfortable retirement.