Planning for retirement is hardly fun or convenient, but millennials need to start today. Last year, MarketWatch suggested that by age 35, millennials have twice their salary stashed away for retirement. In today’s financial climate, this goal may hardly seem attainable. After all, more than half of American households do not have a retirement savings account. However, by planning ahead, rearranging their priorities, and investing now, it is possible for millennials to retire comfortably.
Prioritize Paying Off Debt
Millennials’ first priority should be paying off their debts as soon as possible. College loans, mortgages, and credit card debt have the potential to snowball. Millennials may place paying these off on the back burner, but it needs to be a priority. The best way to do this is to set a concrete goal and strict timeline to pay off debt. This takes self-control and may require cutting back on non-necessary expenses, but it will certainly pay off in the end.
Other potential options include refinancing debt or picking up an additional job.
Start Saving as Soon as Possible
The best thing millennials can do is start planning for retirement today. It may seem difficult to pay down debt while simultaneously saving for retirement, but the more they put it off, the harder it will be. Now is often the best time for millennials to start saving, especially if they don’t yet own a home or have a family to support. Many times it is easier to implement good financial habits when people are young, rather than wait until an older age to attempt changes.
The power of compound interest is another reason to start saving immediately. Although it may seem simple, money saved now will have more time to multiply than money invested later.
Take Advantage of Employee Savings Accounts
If their employer offers one, millennials should certainly take advantage of 401(k) matching. Once they find out how much an employer will match, they should try and get as close to the maximum annual contribution allowed. May 401(k) plans also offer automated annual contributions, which makes adding to them easy. If it’s a small percentage, such as one or two percent, people will barely notice the difference in paychecks. However, every bit of money will help further down the road!
Retirement may seem far in the future, but millennials need to start saving as soon as possible. By planning for retirement, paying down debt, and starting to save money today, they can set themselves up for successful retirement.
Chris Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.