When you are busy with changing diapers and preparing meals for your young children, retirement may seem centuries away. But don’t let it sneak up on you, because before you know it, retirement will be just around the corner. Creating a road map for your retirement now will ensure financial peace as you age. Here are three primary things that moms should know about preparing for retirement.
According to Hands On Banking, the cardinal rule of planning for retirement is to start early. The power of compounding interest is harnessed to its fullest when you start investing early in life. With a tax-deferral retirement account, your money has the potential to grow even quicker because the cash that you would have paid in taxes on earnings each year is deferred. Waiting to start the investment process can have a major impact on the potential of your retirement account to grow.
Know Your Options
Knowledge is money when it comes to investing. One of the best things that you can do for your retirement account is to take the time to educate yourself about the various options and how you can make the market work for you. Manley Capital Management advises that stocks can have a high return if you know what drives the market. For example, the Middle East’s oil prices can be unstable based on the geopolitical climate. When first starting out, your investment portfolio should include riskier options that have a higher upside. However, as you near retirement, you should move your money to safer and more stable options. Understanding all of the options will help you to make an informed decision about your money and your future.
Retirement Before Education
Like most moms, you are probably already concerned about how you are going to fund higher education opportunities for your children. As The Scholarship System points out, it’s important to understand that funding your own retirement should take priority over funding your child’s college education. While it is ideal to provide for both, this is not always possible. When faced with the choice, remember that you can always borrow for your child’s education, but you can’t borrow for your retirement.
Although it may seem overwhelming when you first jump in, the right research and tools will help you make the most out of your current cash. Planning for your financial future should not be taken lightly. Good decisions now will pay off big dividends down the road as you strive for financial security.