There are a lot of different ways to save for retirement, and everyone’s personal finance journey is unique. That’s why the strategies vary so much. Additionally, age matters. Generation X, the Baby Boomers, and the Millennials don’t look at things the same way, even though they are all trying for the same goals with retirement. They have their own sets of problems, and a laundry list of various responsibilities that come with being an adult.
All of those things can add up and create more issues for people no matter what their age. On that list of responsibilities is retirement savings, but a lot of the times new electronics, a life event that wasn’t anticipated, or something else pushes savings to the back burner where it gets far less attention than it really should. That’s why 30 percent of US residents today feel worried about retirement. You shouldn’t panic over retiring, though, because there are tips you can follow to live in the now and still plan for a secure financial future.
Grow Your Savings By Starting Small
Compound interest can be a lifesaver, and it helps you grow your money even if you don’t have a lot to invest. By starting early and putting even small amounts of money into a savings or investment option that uses compound interest, you’ll see that money grow faster.
That’s because this type of interest is calculated on the initial amount invested plus the interest you’ve already earned, so you’re getting interest on your interest. It takes time to build up a good level of retirement savings, but compound interest can make it easier.
So let the interest work over a long period of time. Start saving as early as you can, and continue to save consistently. If you delay your start for a decade, for example, it could take as much as three decades to get caught up.
Determine Your Realistic Financial Needs
How much do you really need for retirement? That’s a question that is unique to everyone. There are some basic assumptions, though, and most people guess too low.
Forty percent of people guess $500K, but they would be about $250K too low for the average. You may need more or less, depending on the kind of lifestyle you want and how long you live beyond your working years. Around 81 percent of people in the US are not clear on how much they should have in order to safely retire.
Plan, Prioritize, and Protect What You Have
You will struggle to reach your goals if you don’t have a plan, and that’s true of retirement and savings, as well. If you want to follow what the experts recommend, take a look at the income your savings will provide on a monthly basis. There are so many options, but don’t get overwhelmed. There are financial advisors who can help you get the information you need to make the right plan.
The basic idea should be saving 15 percent of your income over a period of thirty years, but that’s only a rough outline. Some people will need more, and some may actually need less. There will also be unexpected issues come up, but you don’t have to let them stop you. Create an emergency fund, too, so you’ll be better protected.
Use What Your Employer is Offering
If you have a 401(k) or other retirement savings plan at your company, take advantage of it. Talk to the HR department and they can help you learn about everything your benefits package offers. If you’re a millennial you’re already eight percent less likely to enroll in the company’s 401(k). But you can change that.
Ask if You Have Questions
Don’t ever worry about looking dumb. You have to ask questions or you won’t get the answers you need. Be one of the 36 percent of millennials who get financial advice and help from a professional, not one of the 72 percent who admit they don’t know what they need to save for retirement. Check out the infographic below to get more data on retirement. That way you can compare your savings to your peers, and see how your retirement is stacking up.
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