Many label millennials as being carefree individuals who have little to no concern over their future and finances. However, a recent study finds that millennials are saving more and investing less than previous generations like the baby boomers or Gen Xers.
With an estimated $1.3 trillion in student loan debt, it’s no surprise that youth are concerned about their financial future. Setting money aside now can present a huge gain by the time millennials retire — and the idea of saving $1 million can be even easier than some may think.
Being in your 60’s seems like it’s years away, but time can sneak up without even realizing it. Once you hit retirement, the ultimate goal is to relax, not stress. Saving early can allow that to happen.
“If you don’t start saving in a retirement account while you’re young, you’ll miss out on perhaps the best investment opportunity of your life,” Beth Kobliner writes.
How to save for retirement
First, talk to your employer about your 401(k) or bank with an individual retirement account, or IRA. With both options, you can place bits of your paycheck into the retirement account automatically. You should only budget a small about of your salary into this plan, meaning anything left over after expenses.
When it comes to saving, time is on actually your side. Wells Fargo estimates that if you start at age 25 with a $32,000 salary, you’ll be able to retire with $1 million. Deferring 5 percent of your income towards your 401(k), increasing that amount by 2 percent points annually, capping your deferral at 13 percent while receiving regular raises is the Wells Fargo equation on how to make it happen. Ultimately having the most money for your retirement creates the best value for financial security.
Thinking far in advance can seem intimidating, but planning can take away a huge amount of future stress. Saving early for a retirement plan can guarantee financial security. Even if it’s putting away a couple of dollars here and there, saving now equals a happier you later on.
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