Golden Steps

If you’re in your 20s or even 30s, retirement might seem like it’s a million years away. However, two things in life are certain: You will pay taxes and you will age. So if your golden years are unavoidable, you should be thinking about how you’ll be able to afford them when you’re no longer working (or at least no longer working as much). To help with that, here are some major financial milestones you should hit along the way. Nail these and you should be on the right track.

A Stuffed Emergency Fund

You should always try to maintain a healthy emergency fund to cover for life’s unexpected events. Ideally, you should have enough cash or other liquid assets to cover three to six months of expenses. We’re stressing cash here because you do not want to be in a position where you have to tap into your IRA or 401(k) to cover expenses. You’re going to need that money in retirement and, as CNNMoney points out, if you need to take money from those accounts at the wrong time, you could end up selling at a loss.

No More Mortgage

While mortgage debt is a “good debt,” there’s nothing better than no debt. If you’re retired and still paying a mortgage, that could be a real stressor. Chances are, you’re going to have fewer funds when you retire than you do while you’re working your day job, so try your best to time retiring the mortgage with retiring yourself. Every little bit of extra money you have will help.

Cut the Credit Card Debt

According to a recent study, Americans 65 and older have an average of $6,300 in credit card debt. That’s a lot for people who are trying to live on a tight budget. Just like with a mortgage, any debt you carry into retirement will become more of a burden because you won’t be working as much anymore. Suddenly, there’s no, “Well I can just pay the card off with my next payday” and that can be quite a wake up call. The key to making the most out of retirement is to be as debt-free as possible. Pay down your cards so that when you exit the workforce, you’ll have plenty of cash to spend on more important things. Like margaritas on the beach.