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5 Retirement Tips for MillennialsSubmitted by Paul B. Miller, CFP on July 11th, 2018
The Millennial generation takes a lot of flak for its attitude and beliefs, both from other generations and among media outlets. Millennials have been labeled as entitled and lacking in drive. These characterizations are up for debate, with individual members of this generation disproving those views on a daily basis through their actions. When it comes to retirement savings, you can see just how conflicted the view on Millennials really is today. CNN cited a report from the National Institute on Retirement Security that found 66% of Millennials have nothing saved for retirement.
Conversely, Fortune discusses a survey that found 1 in 6 Millennials actually has $100,000 in savings set aside already. Regardless of where you fall in this generation of Americans under the age of 35, there is still plenty of time to plan and save for retirement. All you need to succeed are the right tips and information at your disposal.
Understand the Time Value of Money
The greatest advantage the Millennial generation has is that of time. Understanding the time value of money is important. The sooner you start saving, the better off you will be in the long run because you can take advantage of compound interest on your earnings to build wealth faster. You will also be able to weather the market storms that are bound to occur over the three to four decades of your working career. Remember, life has relentless bouts of healthy friction. Markets will rise and fall during your lifetime; invest today rather than waiting!
Establish a Goal for Savings
It is rather challenging to save for retirement if you have no number in mind that you are aiming for down the road. Establish a goal for your savings rate; how much money can you afford to set aside each year? Maintain rigor and discipline in your saving, not only for retirement but for other items as well. Do not forget to build an emergency reserve of cash that you can access at any time to cover unforeseen events. When your means improvement and cash flows rise, approach these windfalls with thoughtfulness and determine how that can best serve you in the future, not just in the present.
Nurture Your Career
Kiplinger notes among its retirement tips for Millennials that it is important to nurture your career. This means focusing on your career and applying yourself dutifully in the workplace to earn promotions and raises. When your cash flow improves as a result of those changes, make sure to apply a portion of that money to your savings and spend the rest wisely.
Spend Within Your Means, Not Dreams
One of the most overlooked factors of saving is not the actual act of saving or setting aside of money, but rather the act of controlling how much you are actively spending. Develop a budget you can live by, and spend below your means. Everyone has dreams of what they would do if they had all the money in the world, but do not let your dreams push you into overspending. The more you spend now, the less you will have in the future.
Protect Your Family
Finally, protect your family for the future as well. All the planning in the world will not help you cheat death or avoid accidents. Find adequate life insurance and disability insurance plans to provide coverage for yourself and your family in the event that life factors result in lower cash flow.