Young Adult Retirement Planning: When Is Too Soon?

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As a young adult, handling retirement and estate planning may not be at the top of your mind. However, while you may be young and healthy, there are no guarantees in this life — and you never know when you’ll either decide to retire or get forced into it.

Also, planning for your future can be much easier in your 20s and 30s, allowing you to set up 401ks and SEP IRAs with plenty of time to build them. Not only can it save you money, but it can be less stressful than waiting until you’re approaching your golden years. Below is some information to consider as you get started planning for your future and the future of your loved ones, presented today by FinancialAdvisors.com.

Debt and Setting Up an S Corp

We can rationalize it all we want, but consumer debt is nonsensical when it comes right down to it. Aside from your mortgage payment, which isn’t the worst kind of debt you can have, set a goal to eliminate all your debt—whether in three years, five years, ten years, or some other time frame. This includes all consumer debt, student loans, car loans, etc. Paying off your debt is the first step to building your income, which enables you to save for retirement.

You will also want to plan ways to avoid accruing extra debt, a risk that may be inherent for owners or stakeholders in businesses of all sizes as business conditions fluctuate during a recession. This is a big reason why many entrepreneurs choose to structure their business as an LLC and operate under an S Corp, as personal assets are protected against losses the company may take. There are various business structures, and choosing the right one takes a little research. To simplify the process and get educated, refer to a formation service, which can explain, for example, how to start an LLC.


This goes hand-in-hand with debt. Make it a goal to get your spending under control. Overspending and turning to credit cards will significantly hurt your retirement savings prospects. TLC suggests creating a monthly budget and sticking to it so that you can tell your money where to go.

You can track your budgets over time in a spreadsheet, whether weeks or months, and save the spreadsheets as PDFs for your records. Then you can use an online tool in order to add pages to a PDF, updating your record in a single file. This is a handy way to track your spending over time and remind you of your progress.


Once your debt is paid off, it is a great time to start investing. HSBC says to aim for investing 10 to 15 percent of your income. If you have the opportunity for a workplace pension, max out your contributions. Depending on your situation, you might not be able to invest 15 percent of your income initially, which is okay. Whatever you can do now will put you on the right path toward retirement savings.

For many, an employer that offers a retirement plan is extremely helpful. If you aren’t inclined to set aside funds yourself, or don’t set aside enough, consider a career where your employer assists with this responsibility. An advanced education always helps in this regard, as having a degree can affect your career options. For example, if you want to use a Bachelor of Education, you can take charge of your future in teaching, and most teachers’ unions offer retirement plans.

Do not overlook investing in your home as one of your most significant assets. When you make substantial or noteworthy updates, your equity will get a healthy boost, and this comes in handy whenever you need to sell and have an appraisal performed. Upgrades like a new kitchen or bath, remodeling a room, replacing windows, or even adding central heating and air conditioning can really pay off.

Final Expense Insurance

Like life insurance, final expense insurance comes into play when you pass away, whether of old age or unexpectedly at a young age. In short, it helps pay for a funeral, memorial service, and headstone, among other expenses. Depending on the plan, it can be used to pay for personal loans, medical bills, and different types of debt.

As you determine what kind of coverage to purchase, factor in your preferences for final arrangements and whether you want funds left over to cover other debts. Also, reading reviews of various providers can help you decide which companies and plans to consider.

Advanced Decision

Also known as a healthcare directive, an advanced decision details your medical wishes if you cannot communicate them yourself. The need for artificial life support or falling into an irreversible coma or persistent vegetative state are examples of when your living will would come into play. Other instructions you can provide include your preferences for artificial nutrition and pain medication, among other scenarios.

Medical Power of Attorney

A medical power of attorney will designate a loved one to make decisions on your behalf regarding your health. The person you choose to make your medical power of attorney is essential. They could be responsible for making difficult decisions, such as whether to pursue treatment options and how to manage end-of-life scenarios. Likewise, a power of attorney grants a trusted loved one to make financial decisions on your behalf if you cannot do so.

Whether you’re in your 20s, 30s, or even 40s, now is the perfect time to start planning for your future. Start by tackling any debt you’ve accrued, protecting your assets, getting control of your spending, earning a college-level degree, and looking for ways to begin your investment efforts. Also, investigate final expense insurance and draw up a living will and power of attorney. Starting now will make the process much less stressful than if you were to wait until you’re older, and you will be able to rest easy at night knowing you and your loved ones are prepared.

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