Even though it’s still a little way off, how can Millennials best prepare for retirement? What kinds of strategies should they implement as a part of their financial plan?
(Click the featured times below to jump forward in the episode)
What kind of financial tips can Millennials learn now that will pay off by the time they reach retirement age? We discuss four tips to consider that could set Millennials in the right direction for the years ahead. Once you’ve established a career, you’ll want to direct your funds strategically in order to build a nest egg for the future.
If you want to achieve your financial goals, you should start by saving 10 percent of your income for retirement. You will work a long time, but the more you save early, the more time your money has to compound. Make sure to factor that in when setting your budget.
Everybody is worried about what will happen to Social Security and whether or not it will be around for the future. While we can’t know exactly what will happen in 20-30 years, it’s safe to plan for some changes. Instead of banking on Social Security to start at 65, assume it will be more like 70 or later before you can claim it.
Do you own a home? Owning a home can be a good way to build your net worth. As you make your payments, part of it is interest and part of it is principal. Your home is typically an appreciating asset. Are you able to further diversify by having a rental property?
How are you currently saving toward retirement? Do you have an option to contribute into a Roth 401(k) through your employer? If not, can you request one? Tax rates are likely going up in the future, so paying the tax now so that you can withdraw from those accounts tax-free in retirement is ideal. Make a calculation that fits you best to determine how much to contribute to a Roth.
Are you a Millennial saving for retirement? Feel free to reach out to David for guidance!
Listen to the full episode for financial tips or click on the timestamps below to skip to a particular Millennial tip.
[0:34] – What should Millennials be doing to save and prepare for retirement?
[2:06] – Be focused and working on your career.
[3:57] – Tip #1: Save at least 10 percent of what you make.
[7:34] – Tip #2: Plan for Social Security to start at 70 instead of 65.
[9:58] – Tip #3: Diversify investments with real estate.
[15:53] – Tip #4: Consider the Roth 401(k).
[23:33] – Does David work with Millennials?
“When you’re in your 20s, and 30s, and early 40s, you are far enough from retirement that a little bit of guidance goes a very long way to getting you to the goals that you have set for yourself.”
– David Dickens