My fellow Millennials and I make up the largest labor force in the U.S. and we are expected to work longer due to college debt, rising rent costs and dwindling retirement benefits such as Social Security.
Our generation, which spans 16 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 meant that each of us should abandon hopes for the Future You – rather, it means we need to further our financial education and make smarter decisions to overcome the obstacles we face.
That’s why I asked Ubiquity Retirement + Savings VP of Brand + Culture Andrew Meadows, who has more than 10 years of experience in the retirement industry, to guide me and my fellow Millennials through the world of retirement saving. Andrew offered some critical steps we can take in each stage of life to prepare for the future. Lesson one: It’s never too early to get started!
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 lives.
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,” Andrew said.
At this stage in your life, it is all about the basics. You don’t have to start investing now!
Lastly, Andrew recommended 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,” advised Andrew, adding that you can go to your local bank and set up a regular 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,” added Andrew. Talk about a win-win!
For my fellow Millennials in their early 20s who weren’t exposed to financial education in their teenage years, don’t worry! There is a plethora of resources out there like this!
3. Mid- to late-20s
By now, you’re probably either a full-time member of the workforce or actively pursuing your career.
Andrew’s advice? “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 OK if your first job does not offer an employer-sponsored retirement plan; you are still investing in your career by gaining useful experience. However, Andrew stressed the importance of making 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. Check out more tips for new full-time employees in this blog post from Andrew himself!
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?
Also, something called compound interest will start to kick in here. If you’re not familiar with that term – and the magic qualities it has that can really benefit the Future You – check out the definition here.
4. Early 30s
For the rest of my fellow Millennials who were born earlier than the rest of us, a common blunder is not contributing enough to your nest egg.
“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,” Andrew shared. “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!