While practically everyone knows that they need to save for retirement, actually reaching the goal of having enough money to last your through your golden years can be difficult to achieve. Each generation faces a unique set of challenges and advantages when it comes to saving for this important life event, but there is some advice from Credit Logon that can apply to just about anyone.
Start small and your savings will grow
If you’re a Millennial, then you have the advantage of a long retirement window. Over the next several decades, compounding interest will make it possible to see even the small amounts of money that you can put aside now quadruple by the time you’re ready to retire. While older generations don’t have as much of an advantage, it is important to remember that your savings will continue to accumulate interest while you’re retired. With careful investing, it’s possible to make a retirement nest egg that seems too small into enough money to live comfortably.
Know your financial needs
Forty percent of Americans estimate that they will need $500k to retire, while the average retirement cost is nearly $750,000. While it is easy to assume that most people are underestimating how much they need, it’s also important to realize that many retirees are probably taking into account the possibility of downsizing a home or cutting back on their lifestyle. Baby Boomers are certainly better able to predict how much money they will need for upcoming life events than Gen Xers or Millennials, giving them a distinct advantage here.
Despite what plenty of experts may tell you, there is no “right” amount of money that everyone needs to retire. How much you need to save will depend on a range of factors including the way you invest, where you live, your lifestyle, and the age at which you retire. When these factors are combined with factors you can’t control, such as your health and inflation, it isn’t surprising that CNBC reports that 81 percent of Americans don’t know how much they need to retire.
Enroll in Employer-Based Plans
One of the easiest and most effective ways for anyone to save for retirement is to take advantage of their company-sponsored retirement plan. These plans offer distinct tax advantages and make saving for retirement relatively simple. Unfortunately, it’s all too common for Millennials to not see the advantages to saving in one of these plans early on.
Look for help
Nearly 72% of Millennials admit they do not know as much as they should about retirement savings. While fewer members of older generations will say that they don’t know enough about investing, there’s still a big gap between what the average person should know and how much they really know. Unfortunately, only 36% of Millennials actually get help from a professional financial advisor. No matter what your age is, don’t be afraid to ask a professional to review your financial plan.
Plan, prioritize, and protect
No matter how old you are, having a retirement plan is crucial to reach your savings goals. Developing that plan, though, can be a real challenge. While older generations may have a clearer picture of what they want their retirement to look like, there is a shorter window to meet their goals. Younger generations have plenty of time to save, but must contend with an unknown future.
Fortunately, a skilled financial advisor has experience in dealing with all of these situations. Whether you just need someone to review the plan you already have, or if you need help getting started, look to a professional for guidance.