Millennials’ Guide to Retirement Saving

​A recent analysis of the Federal Reserve’s 2013 Survey of Consumer Finances found that the average working-age American couple has only $5,000 saved for retirement. An overwhelming majority of couples—70 percent—have less than $50,000 saved.1
 
As you might imagine, that amount is probably far less than those couples need to fund their desired lifestyle in retirement. As a new graduate, you likely don’t want to end up in the same position.
 
Unfortunately, many young workers haven’t taken the steps needed to avoid a similarly underfunded fate. A study from the Federal Reserve found that 40 percent of those ages 18 to 29 have given no thought to retirement, and 50 percent have no retirement savings or pension.2

Retirement may be the furthest thing from your mind right now. More immediate financial goals, such as paying off student loans or buying a first house, may seem more urgent. However, retirement is such a large financial goal that it will likely require focused saving over a long period of time. The earlier you start, the better off you will be.
 
Retirement planning doesn’t have to be a painful task. Below are a few tips to get you started. Even if you only implement these simple steps, you are still likely to be in a much stronger position than you would have been otherwise.

Take your employer’s 401(k) match.
You may work at a company that not only offers a 401(k) plan but also offers a match on employee contributions. For example, the company may match your contributions up to 3 percent. That means if you put in 3 percent, the employer will do the same, giving you a total contribution of 6 percent.
 
At a minimum, contribute enough to capture the full match amount. That represents free money, and it’s a great way to accelerate your savings.

Don’t wait for an “easier” time to save.
You may think it would be easier to start saving later, when you are likely to have your student loans paid off and you may be making more money. This kind of thinking is usually incorrect, as there may not be an “easier” time to save.
 
While your income may increase in the future and you may pay down debt, you could see greater expenses in other areas. For instance, you may buy a home, have children or even start a business.
 
There are always challenges that make it difficult to save. Try to establish a disciplined saving routine so you always make it a priority, no matter what challenges you face.

Set up auto-contributions so you don’t miss your money.
You may look at your budget and feel that it’s too tight to accommodate regular retirement savings. Here’s a trick you can play on yourself to make those contributions easier to tolerate: Set up auto-contributions from your paycheck directly into your 401(k), IRA or other accounts.
 
The money will come out of your check automatically and will never reach your bank account. You will likely adjust your spending over time to accommodate your net pay, thus you won’t even feel the loss of income in your spending habits or your lifestyle.
 
Ready to establish a disciplined savings plan so you can live a comfortable retirement? Contact us at Safe Retirement Strategies. We can help you develop a plan and create good saving habits. Let’s connect soon and start the conversation.

 
1http://www.marketwatch.com/story/the-typical-american-couple-has-only-5000-saved-for-retirement-2016-04-28
2http://www.federalreserve.gov/econresdata/2014-economic-well-being-of-us-households-in-2013-retirement.htm


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