Retirement For Millennials
Millennials refer to people today who are between the ages of 17 and 35. One survey revealed that millennials are not preparing for retirement adequately. Almost half of them haven’t even started saving money for retirement, and some won’t be able to retire until they’re well into their 70s.
Part of the problem is that millennials as a group aren’t earning enough money, compared to how much the baby boomers earned when they were of the same age. Millennials are also burdened by lots of debt, including credit cards and student loans. With their monthly debt payments and living expenses, there’s not much left. Add the fact that most of these young folks are virtually uneducated about credit cards, bills management, and debt repayment, and it’s understandable why millennials are reading towards retirement disaster.
On a side note, because we’re going to cover this in a future post, building businesses has been a trending retirement strategy. We’ve worked with businesses consulting agencies to help millennial build businesses such as the Rescue One Restoration & Remediation company. It’s currently in its start up stages but is picking up traction.
But if you’re a millennial, there are steps you can take right now that can get you started in the right direction:
1. Open a 401(k). This may come as a surprise to older generations, but millennials aren’t as likely to open a 401(k) plan as the older guys. This is true even when the company they’re working for offers matching. Basically, in this plan when you set aside a certain amount of money for retirement, the company matches that amount towards your retirement too. It’s a good plan, but somehow lots of millennials aren’t taking advantage.
Another reason for the lack of a 401(k) plan is that many of the professionals in their 20s and 30s these days work at jobs where the employers don’t offer a 4019k) plan as a rule. Many small businesses don’t have a 401(k) plan, and the same rule goes when the millennial is working as an independent contractor.
So set aside at least 5% of your salary towards retirement. You get free money when your employer matches that amount. Over a span of 30 years, you can accumulate quite a bit of money in the end.
2. Open a savings account. Whether your company matches your savings or not, you have to have money saved for retirement. If you don’t, then you’ll have no money left when you’re no longer able to work.
- Track your expenses. You can use apps for this. You just need to make sure that you list down all your expenses every month, from rent, utilities, groceries, clothes, and entertainment. You can then more easily identify which types of expenses are becoming excessive.
- 3. Live below your means. This is more challenging that living within your means. You can’t just minimize your expenses so that you’re getting by enough each month to hold your water above the water. You have to tighten your belt even further. Your budget must include a certain amount towards your retirement savings, and not just towards your living expenses.
So take account of your expenses each day. Which ones aren’t exactly necessary? You may want to cut down on your entertainment expenses, and perhaps those top shelf liquor and gourmet coffee aren’t quite necessary.
Save money, spend less. These are the basic rules for millennials if they want to retire someday. Forget about the latest fads regarding high tech toys and find dining establishments. Take care of yourself by planning for your retirement, or you’ll find yourself unable to retire until you’re extremely old.