Do you think retirement is too far away to be caring about in your 20s or 30s? Are you afraid of how volatile the stock market is? Has it been a struggle to save any money, so much so you can’t fit retirement savings into your budget?
There’s good news and bad news. The bad news is that not saving for retirement could leave you working well into your 70s, possibly even later, because you simply can’t afford to retire.
The good news is that you can start moving in the right direction today. It’s never too late to start saving for your future. The more you delay saving, the more opportunity you lose.
Still wary of the stock market? Think of it this way: You’re investing for the long-term. You’re not going to touch your retirement savings for at least another 30 to 40 years. That’s more than enough time to ride the inevitable waves of the market and come out okay.
Besides, keeping your money in a bank account earns it next to no interest. There’s no way your savings will keep pace with inflation, which means your money will be worth less in the future.
Millennials are on their own to save for retirement
It’s probably safe to say you’re aware that there’s a lot of uncertainty regarding the availability of pensions and social security for millennials.
According to the 15th Annual Transamerica Retirement Survey of Workers, most millennials are erring on the side of caution and taking retirement savings into their own hands via 401(k)’s or IRAs.
We can’t rely on the government or our employers to take care of us in the future like many of our parents do. It’s also unrealistic to think we’ll stay with the same employer for 20+ years as they did.
Speaking of parents, it’s similarly foolish to hope for an inheritance that will fund your retirement. At the end of the day, the only way we can guarantee ourselves a secure financial future is by taking control of our situation. No one else is going to do it for us.
Why saving later is detrimental
Besides the fact that we’re on our own to save, with life expectancy increasing like crazy, we’ll need to save even more than previous generations did.
While life expectancy differs based on the individual, it’s better to err on the side of caution when it comes to saving. If you want to work past 60 or 70, you should do it on your own terms, not because you need the money. If you want to retire around 50 or 55, then you’ll need to save more to make up for those years not spent working.
We also need to factor in medical expenses. Just as an example, a 55-year-old couple that wants to retire 10 years from now will need $463,849 to cover medical costs in retirement. Imagine what that figure will look like by the time we’re ready to retire!
Okay, but where can I get the money to save?
You understand you need to start saving for retirement, but how the hell can you make it happen when you’re struggling to save enough money for a vacation or to pay off your student loans?
It almost feels like you can’t win with so many priorities competing against each other, but thinking, “I’ll never be able to save that much!” is a defeatist attitude.
The reality is saving for retirement is fairly easy if you’re already used to saving money. It’s a matter of taking advantage of matching contributions if your employer offers it through a 401(k), or, if that’s not an option, opening a Traditional or Roth IRA.
You don’t need thousands of dollars to start saving and you don’t have to actually save a million dollars to retire. You just need to grow your existing wealth and, thanks to compounding interest, a safe retirement is attainable, even on a five-figure salary.
Do yourself a favor and make saving for retirement a priority so you can live the life you want to live in retirement, which likely doesn’t include being a Walmart greeter.
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