African Soul

Setting Financial Goals For Your Retirement

Financial goals are key to helping you achieve the type of future you want. Developing short-term, mid-term and long-term goals will help you learn to live within your means, get out of debt, save for retirement and other financial milestones.

Short-term financial goals are objectives that can be achieved in a year or less. These goals often include creating a budget, building an emergency savings account and paying off credit card debt. Taking on these short-term goals early will give you the confidence boost you need to tackle other, longer-term financial objectives, such as saving for a house or car.

A common¬† goal that many people set is to save enough for retirement. It’s generally recommended that you save 10% to 15% of each paycheck in a tax-advantaged retirement account, such as a 401(k), 403(b) or traditional or Roth IRA. Saving for retirement is a crucial goal because it ensures you will have sufficient financial resources to maintain a comfortable lifestyle after you stop working.

Another important long-term financial goal is to build an emergency savings account. It’s recommended that you have 3 to 6 months worth of expenses saved in an emergency fund. This will protect you from going deeper in debt or having to tap into other investment accounts in the event of an unexpected expense or job loss.

Creating a realistic budget is an excellent way to determine your current spending and income levels. In the first column of a spreadsheet or on a piece of paper, write down your typical monthly expenditures. In the second column, estimate what your desired annual living expenses will be in retirement, factoring in expected increases or decreases in your typical costs and any additional expenses you anticipate. Once you have an estimate of your retirement income needs, subtract the amount of money you expect to receive from Social Security or other sources in order to create a targeted savings goal.

When you’re young and healthy, it may be easier to save more than you might need in retirement because you have more time for your money to grow. However, most financial experts recommend that you start saving for retirement as soon as possible, even if it’s only in small amounts.

Once you have a solid understanding of your financial goals, it’s important to review them at least once a year. This will allow you to evaluate your progress and make necessary adjustments along the way. By establishing and revisiting your goals, you’ll be on the path to the financially secure retirement you deserve.