Millennials: Take These Steps to Prepare for Retirement
Millennials make up the largest labor force in the U.S. and are expected to work longer due to college debt, rising rent costs and uncertain retirement benefits such as Social Security.
The Millennial generation, which spans 18 years, hasn’t been dealt the best hand, having come of age during the post-9/11 and Grand Recession era. However, that doesn’t mean that they should abandon hopes for the the future, or consider a “work till I’m dead” approach. Financial education and smarter decision making will help this generation overcome obstacles, while also potentially being the savviest generation on record.
1. Your teens
One of the biggest mistakes you can make in your teens is not seizing the opportunity to learn about money and establish a foundation for the rest of your life.
Some of us are lucky in that our states require us to complete personal finance courses to graduate high school, so we’re forced to pay attention to the importance of learning about savings.
However, regardless of whether financial education is required or not, you should make it a priority at this point in your life.
A lot of people complain that personal finance is boring, but if you listen to the experiences of the people you know — parents, grandparents, relatives, family friends, etc. — you will learn a life lesson and probably hear some great stories in the process. At this stage in your life, it is all about the basics. You don’t have to start investing now!
Lastly, consider getting your feet wet in the job market with a part-time job you enjoy so you can start understanding the value of money and learning how to budget for yourself.
2. Early 20s
In your early 20s, you may be in college or just entering your first full-time job. Either way, both these paths bring a new kind of freedom. However, while it’s easy to embrace and experiment with that independence, you can’t forget that earning extra income will give you cash to spend now and to save for later.
Whether you’re in college or working after high school, don’t wait to start saving for retirement until you have access to a 401(k) plan. Consider using a saving app, or even going to your local bank to set up a savings account. Not only are you saving money early, but you’re building a financial reputation with your bank, which will come handy if you seek a loan in the future.
3. Mid- to late-20s
By now, you’re probably either a full-time member of the workforce or actively pursuing your career. This is when you want to look for jobs that value their employees enough to offer the right benefits that will help you save for retirement and other necessities.
It’s okay if your first job does not offer an employer-sponsored retirement plan – you are still investing in your career by gaining useful experience. However, you want to make sure your next company offers some kind of employer-sponsored savings plan.
Even if it seems like a flashback to a classroom, go to your company’s open enrollment meetings, which are filled with useful information.
After you start contributing to a retirement plan and building the foundation for a nest egg that will grow over time, you will start to learn about yourself and your investment style. Are you risky, conservative or somewhere in between?
4. Early 30s
As your salary and responsibilities grow, so will some of your expenses, but it’s important to increase your savings contributions with those raises and promotions. This is the right time to identify bad financial habits you may have developed and correct them before it’s too late.
If you miss out on savings opportunities now, it will cost you a lot more down the road. Everyone has retirement dreams, but they won’t become a reality without implementing a healthy savings strategy!