Retirement Planning In Your 20s
So you just graduated with a mountain of student loan debt, found a great job that pays well, but retirement seems like a lifetime away; why worry about it now? How do you know when to start planning for your retirement? Whether you’re young or old, unemployed or approaching retirement; everyone should be thinking about how they can save money and plan for retirement. The problem is, how do you save for retirement when you’re in school, fresh out of school, unemployed, and/or living off of limited income as it is?
A 2010 Retirement Confidence Survey reported that the majority of people that participated have virtually no savings or investments at all. Twenty-seven percent reported they have less than $1,000 in savings; while 54 percent reported that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000. Only 11 percent reported to having more than $250,000 in savings. How much do you have saved for retirement?
As young adults, we try to pay our bills on time, live within our means, have fun, and avoid getting into too much debt; however, saving and planning for retirement falls on the back-burner when the moment of truth comes and our paychecks are divided down to the last penny to pay for other “more-important” items.
With today’s still static economy and the unemployment situation improving at a snail’s pace; everyone is feeling the effects. Needless to say, retirement savings isn’t exactly at the top of the priority list for most people now-a-days. If you’re young or in a financial rut, it may come as a surprise to know that it doesn’t take much to get started and start planning for retirement. If your situation isn’t ideal, then your savings probably won’t be either, but the point is that you start already. You’re in your 20’s and have over 40 years to continue putting pennies in the piggy bank.
If you’re thinking about planning for your retirement, these quick tips could lead you towards the right direction.
Make Moves Today
You’re young and retirement may seem like something an older generation should be worrying about, but now is the time to get started. Don’t fool yourself into believing you have another 10-15 years to worry about planning for retirement; by then, you could have tens of thousands of dollars savings.
Get The Facts
As an adult, everything is up to you. Don’t look for quick fixes for retirement because there aren’t any. You have to research your options, make phone calls, and ask questions to gain the understanding you need to achieve your goals. Planning for retirement is a long-term and ongoing project that requires planning and preparation. You can’t plan without information, so do the research and ask questions.
Create A Plan
Develop a detailed written retirement plan. If you are not sure how to create one, the internet is full of free information and templates. There are also several retirement savings calculators online that can aid you in calculating your retirement contributions and determining what you want to your savings to be at retirement. Additionally, be sure to incorporate any changes to your spending that will affect your retirement plan positively. Unless you are rich, if you want to start saving for retirement, you will have to adjust your spending in one way or another. Set goals, determine what you need to achieve them, and incorporate them into your plan.
Whether you can put aside 10%, 5%, 3% of your income or $25 a paycheck; start saving NOW. The plan will change with time; there will be promotions, salary increases, career changes, and plenty of opportunities to increase the contributions to your retirement savings plan overtime. Focus on doing what you can NOW.
Stick With It
Forget about your retirement savings account. It isn’t extra cash for that trip to Australia you want to take with your sweetie; and it’s definitely not an emergency fund if you get into a car accident or your car brakes down (savings articles coming soon). Don’t think about withdrawing from it or borrowing against it; pretend its money you don’t have and you will be better off in the long run.
Whether you prefer 401k, IRA’s, savings accounts, CD’s, money market account, mutual funds, stock investments, or bond investments explore your options, do the research and get started on a plan that works for you now.
Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.— Mark Twain
Vanessa Maynard is an informed and experienced finance writer with subject matter expertise in a variety of industries within the financial sector. By trade, Vanessa is Consultant for a popular firm that provides residential and commercial loan review and due diligence, independent pricing, staffing solutions, consulting, surveillance, special servicing, and analytics and has built a reputation as trusted advisors in the mortgage. She has participated in engagements throughout the United States, Europe, Mexico, Canada, and Puerto Rico.