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Millenials, When Should You Start Saving for Retirement?

For young adults, retirement may seem like a lifetime away. You’re just now starting to build your life, and you probably have rent, utilities, necessities, and other loans to pay off. With a low income and high expenses, retiring is the least of your priorities. So, it’s very easy to forget about saving for the future.
 
According to a study conducted by Financial Finesse, only 17% of Millenial respondents say they are on track to retire with 80% of their income in retirement. Many have not even thought about retiring or how much money they will need in the future. However, apart from not having the normal retirement money set aside, the millenial generation is expected to experience major changes in Social Security, pensions going away, and taxes going up. So, it is especially important for those in their 20s and 30s to start saving now.
 
If this is you, it’s time to start thinking about retirement! Although it seems far away, you don’t want to end up out of money at a later stage of your life. And by starting now, you can have substantially more money tucked away than someone who starts 5 or 10 years later. 
 
Here are some easy ways to start saving and insure that you don’t have any retirement worries:
  • Get educated. Many young adults are not educated on what they should be doing to save, so they don’t do anything. Finances can be confusing, so ask someone you trust. Whether you ask a financial advisor or just your parents, it is very important to be informed so you can have a good financial future.
  • Sign up for a 401(k). Does your company give you a 401(k)? 401(k)’s are retirement savings plans sponsored by your employer allowing you to invest a piece of your paycheck each month before taxes are taken out. In a typical plan, employers will match up to 3% of your salary. Find out how your 401(k) plan works. Many plans offer a spread of mutual funds composed of stocks, bonds, and money market investments. And if you are still looking for jobs, make sure you accept one that has the benefits and 401(k) plan you want.
  • On the other hand, if your company does not have a retirement fund, use a Roth IRA instead. With this plan, you use money that has already been taxed as part of your normal paycheck to fund your retirement account. The money withdrawn in an IRA is tax-free later. You can set up portions of your paycheck to be automatically deposited in this account each month.
  • Make a plan to save. Once you have a retirement account in place, it is important to start saving. Set aside a portion of your paycheck each month. Although it may not be a lot at once, it will all add up so that you eventually have a lot of money saved in your retirement fund.
  • Avoid debt. If you have a lot of debt, you will probably be stuck paying off past bills and interest charges. It is very important to avoid debt, so you can focus on the future. So, try not to overspend, and pay your bills on time! By doing so, you will be able to save that extra money and put it towards your retirement.
It is important to start saving early. You don’t want to be 5 years from retiring and realize you have no money to your name. So start following these tips, and you’ll be on the path to having a great retirement!
 
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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