When you’re just in your 20s or early 30s—not so very far removed from your college days, and just starting to build a life and career for yourself—retirement may be the furthest thing from your mind.
Though it may be hard to make yourself think too much about your retirement years, it’s nevertheless vital; if you don’t start seriously building a retirement plan as early in life as possible, you may regret it once your retirement years actually come.
But what can young people do to build retirement dreams for themselves—realistically?
Building a Firm Foundation for Retirement
There are a few steps—simple ones. Not necessarily easy, but simple. Consider:
– Pay yourself! There is simply no substitute for developing a habit of savings. Every time you get a paycheck, put aside a percentage of it—even if it’s fairly small—in a savings account. Build this habit. Develop this routine. It’s the single most important thing you can do for your retirement.
– Make your money work for you. Don’t just put that saved money in a sock drawer or under the mattress. Invest it. Make it work for you. Speak with a financial planner about the smartest ways to invest.
– Use your employer match. Sometimes, employers will match you, penny for penny, with the money you contribute to an employer-sponsored retirement account, such as a 401(k). Take advantage of this. It is essentially free money for your retirement account. Max it out, if you can!
– Get an IRA. This may be a better retirement tool than your 401(k), and definitely something to consider for those who do not have 401(k)s through their work. This is something else to discuss with a certified financial planner. (Please be sure to speak to your advisor to carefully consider the differences between your company retirement account and investment in an IRA. These factors include, but are not limited to changes to availability of funds, withdrawals, fund expenses, fees, and IRA required minimum distributions.)
– Don’t be intimidated. Once you invest, it can be all too easy to get caught up in the day-to-day happenings of the markets. Remember that your retirement could be 30 or 40 years away, if not longer, so don’t sweat the small stuff. Day-to-day volatility is nothing to obsess over.
– Consider ways to protect your family. A good retirement plan encompasses not just savings, but also disability insurance, life insurance, and so on. Educate yourself about some of these products and the ways in which they can safeguard your family’s financial future.
You’re never too young to start planning your retirement—or to speak with a retirement planning professional. Contact someone on the Stonepath Wealth Management team today, and start the conversation about your financial future.