Retirement for millenials is something we never think about, but be sure to check out our 5 easy tips to start planning for your millenial retirement today.
You’re a 20 or 30 something-year-old in the United States planning for your future. Seems kinda early, right? Wrong.
It’s never too early to start planning for retirement. Even if you’re in an entry-level job, it’s important to think about where you’ll be in the next 40 to 50 years. How much you invest into your retirement plan, determines how comfortable your retirement will be.
How can a Millennial take the bull by the horns, you ask? Simple, understand what retirement is and the process of saving. Millennial Retirement is possible with understanding the value of money and taking our tips and turning them into your own.
Table of Contents
What Is a Millennial?
Okay, so maybe we need to start with the definition of who falls into this Millennial category. The term “Millennial” refers to anyone born in the 1980s and 1990s. This generation comes during a time of computers and technology.
Most of the Millennials were born with a computer in the home but before the Generation Y phenomenon of using a phone or tablet for entertainment and learning at a young age.
Roughly 43.72 million people were receiving Social Security benefits in the U.S. in 2018. That number is more than 10 million over the 32 million receiving benefits in 2008.
Retirement will continue to climb, and it’s important that the younger generations understand the logistics of what retirement will mean for them. It’s not just about investing in a 401k, though that can play a part.
The retirement age in the United States is 66 years old for those born before 1960. Anyone born after that time, (hello Millennials!) will have a retirement age at 67. That age, however, is continually shifting, so expect the age to rise as time goes on.
The longer you prolong your retirement, the more money you get back monthly. Of course, that means that you have to be healthy enough to work until then, which might be hard for some people.
Let’s talk about the tips you should be taking to prepare for the Retirement stage of life. No matter what job you have now, you need to invest in your future.
Tip 1: Discipline
Do you really need that pair of shoes? Can you eliminate one take-out meal a week? These are the questions you’ll ask yourself if you’re serious about planning for retirement.
It’s hard learning to be savvy with money, and even harder to say no to things that you seemingly can afford. The best practice you can get in is learning the balance of happiness and compromising.
Maybe you spend this Spring Break at home with the family and plan a trip for next year. Think of all the money you can put back for savings that way. Once you break the habit of spending money to gain material things, you’ll notice the bigger picture becomes clearer.
Tip 2: Automation
For some, the easiest thing they can do is automatically have money pulled out of their check and put into savings. If they can’t see it, they can’t miss it. You’ll need to decide if this is what’s best for you.
If you’re investing in a 401k sponsored by your employer, find out what the maximum contribution can be per paycheck. If you can live without that amount, do it. YOU will reap the rewards later.
Tip 3: Justify the Expense
It’s important to note that Retirement and Savings can be the same account. If you choose not to invest through a 401k (or something similar), a bank account will work.
But when you combine Savings and Retirement, it’s up to you to use your judgment when you should and shouldn’t pull money out. Is that $100 for your best friend’s birthday party going to make a difference in the long run? Probably not.
However, if you justify pulling out small amounts regularly, you’re still shooting yourself in the foot. Those small amounts will add up over time. Your Savings and Retirement fund(s) should be used solely for living expenses and emergencies.
The sooner you learn that the better off you will be. If you’re not confident in yourself to manage the two together, don’t. Keep them separate and you do you, boo.
Tip 4: Invest in You
Anytime you get a bonus or raise, enjoy it! But also invest it.
If you get a 30% raise, pull out 20% of that to invest in your retirement plan. The remaining 10% is still a large increase and you will definitely see the joys of the additional money.
By investing in your retirement, you are preparing financially to have the most comfortable last stages of your life possible. Nobody wants to worry about paying bills or getting groceries, let alone at 80 years old.
Tip 5: Maintain
Probably the most important tip is to maintain the same level or greater of your investment. Life happens, there will always be friction and issues pop up. But if you can solve it by not dipping into your Retirement or Savings, do that. Future you will be thankful!
Also, with that comes the joys of paying off loans. Say you have a car payment of $600 a month for 7 years. Well, at year 8 you don’t have that payment anymore, so invest that money into your retirement.
If something comes up that month that requires the money, use it, but don’t abuse that sentiment. Refer back to Tip 3 in those scenarios.
You’ve Got This!
After you’ve understood the value of your money, you can conquer saving for retirement. You’ve got this!
Take these 5 tips and cater them to your needs and values. It isn’t a one size fits all, as retirement can potentially come early in life for some, and much later in life for others.
Don’t rely on Social Security alone, as there’s no guarantee how long your health will hold out. You’re young now, invest in your future now while you still can.
Millennial retirement is a thing to look forward to, even though it may seem daunting now. You will thank yourself for looking out to the future, we promise.
If you have any questions, feel free to reach out. We’d love to help you!