Chances are, if you’re a millennial, turning 65 isn’t something you think about all that often. It’s literally decades away. Afterall, the oldest millennials, at 35-years-old, have a whopping 30 years to go before they retire. Nevertheless, that doesn’t mean that they shouldn’t consider planning for retirement now. Doing so may be a downright genius move.
Sure, millennials are probably focusing on more immediate concerns like getting established in the career of their choice, paying off student loan debt, or saving for a house. Yet contributing just a little during one’s 20s, and slightly more during one’s 30s can save one from having to contribute much more as they enter their late 30s and early 40s, a time when most Americans have many more responsibilities like raising a family, paying for their children’s educations, paying off the mortgage, paying taxes, etcetera.
Planning For Retirement is Smart
The nuts and bolts of saving for retirement doesn’t have to be stressful. The company you work for may present you with a retirement savings plan. If so, look into your options and do the math to see how much you stand to earn in interest every year. Many online calculators are available so that you can get a good grip on how much you stand to put away over the long haul. From there, you can decide how much you would like to contribute every month or installment period (3-6% is the general contribution amount). Although retirement may seem like light years away, it’s going to surprise you how fast the years fly by once you get rolling in your career. And if you’re wondering, retirement plans can be moved or converted into an IRA when you move jobs. Cashing out that retirement account, however, is not recommended (Forbes article).
Don’t let things like student loans, wedding plans, or even starting a family derail planning for retirement. If you feel like this is an area you’re unsure about, consult a financial planning professional (not a broker for one specific investment company) who will inform you of all your options and answer all of your questions about saving for retirement.
How Compounding Interest Works
Starting now can give you a substantial lead in how much you are able to earn through your retirement plan. Whether you choose to put your retirement money into an IRA, mutual fund, or other investment, compounding interest works in your favor. When it comes to earning interest on your retirement plan, time is your friend. The more time your money has to earn compounding interest, the better.
Set yourself up for a future that will enable you to retire with ease and enjoy life. Planning for retirement while you’re young is more than smart, it’s wise. Have the foresight to envision that far-off future and plan accordingly.
Answering the Million Dollar Question: How Much Do I Need to Retire?