One of the biggest responsibilities that all people share is the responsibility to properly save and plan for retirement. For millennials, and other people that are decades away from retirement, this is often not a consideration. To ensure they are properly prepared for retirement when the time comes, here are four tips that millennials should start following today.
Start Saving Now
The most important tip that Millennials need to follow to properly prepare for retirement is to start saving today. Millennials are generally young enough to take advantage of compound interest. Compounding interest over several decades will help even small Investments today grow to extremely significant amounts over time. Those that are able to start saving in their early twenties will often have hundreds of thousands more dollars in retirement than those who wait even a decade.
Open Retirement Account
Millennials that are looking to plan for retirement should also open tax-advantaged retirement accounts. 401ks and IRAs provide investors with considerable tax advantages. In many cases, employers and major corporations will even provide employees with free match dollars in there 401K accounts. At a minimum, all Millennials should try to save at least 10% of their income in retirement accounts and take advantage of any additional employer match benefits.
Another very important step for millennials to follow to ensure that they properly plan for retirement is to be fully insured. All millennials should focus on getting some form of short-term and long-term disability insurance. This will provide them with financial coverage in the event they are injured or sick and not able to work in the future. Those with dependents should also consider getting a life insurance policy to ensure their families are properly covered and protected.
Finally, millennials should consider speaking with a financial planner to help them better prepare for retirement. Most millennials do not have specific education in personal finance, which means they are not aware of all the available investment strategies. Will help them to better learn how to budget, take advantage of retirement and other savings accounts, and even a long-term savings plan.
Start early. Plan for retirement
In conclusion, saving for retirement is an extremely important responsibility that all people share. For millennials that are decades away from retirement, this may not seem necessary today and many are not saving or properly preparing. To ensure that they are on track for retirement, there are several tips that all millennials should follow.