How young people should view their retirement goals


Until a year ago I was a freshly graduated student with a million things on my mind. None of them included what it might be like to retire someday.

On the contrary, I was desperately trying to find a job that could help me reduce my soaring college debt while simultaneously consuming hundreds of hours of pessimistic climate change news. As, leave me alone, mom! The weight of a world that must be saved rests on the shoulders of my generation – can we save the absurd 401s for later ?!

I’m not the only one. Even before the coronavirus epidemic, young people were keenly aware of the impact of recent economic crises on our future and how we may never be able to “retire” in the traditional sense because of they. On top of that, a recent Money and Synchrony Bank survey found that 39% of retirees are still saving for retirement, retired. Add reports that we are on the verge of having the worst recession of our lives – with job prospects at their lowest thanks to the pandemic – and the thought of sitting on a pile of money that we don’t can’t touch until we’re old seems laughable.

Ads by money. We may be compensated if you click on this ad.A d

In good times and in bad times, everyone is united in one economic goal: to save money.

Further develop your financial knowledge on how to save effectively with key findings from Synchrony’s Guide to Money & Savings, available for free download below.

View interactive report

“It’s hard for many people to feel empowered to save when the future is more indefinite than ever before,” says Douglas Boneparth, Financial Advisor and Chairman of Bone Fide Wealth.

But it is a dangerous and extremely misinformed state of mind. “People confuse difficulty with incapacity and we have to change that,” says Boneparth.

No matter how nihilistic your point of view is, the reality is that the world is unlikely to “end” anytime soon. And as deeply uncool as it sounds, if you will. future you to have any chance of enjoying a high quality of life, you need to start mapping your finances now, and that includes building up your retirement funds.

That’s not to say that a lot of Millennial and Generation Z “catastrophisms” are unfounded. In all likelihood, my age group will work much longer than our parents, and under more excruciating conditions. But as with every crisis we’ve experienced so far – with coronavirus being the most recent addition – people who are financially prepared almost always fare better.

“There’s something to be concerned about right now,” says Tanja Hester, author and co-host of The Fairer Cents, “But a lot of people are working from home right now and spending less. They have more room in their budget to contribute more to a retirement account and create more security. ”

We can look at the spending habits of current retirees as an example of what the future of retirement might look like: working part-time beyond normal retirement age, finding unique ways to cut costs general or, if you’re lucky, turn a passion project into a business to meet the cost of living. But are federal retirement staples like Social Security? Don’t put all your money on it.

Ads by money. We may be compensated if you click on this ad.A dMoney Advertisements Disclaimer

Interested in educating yourself further financially?

Download Synchrony’s Guide to Money & Savings for free to learn the key insights into money, savings, and financial happiness.

To start

“We know that programs like Social Security won’t be enough for the younger generations, because people already spend almost half of their Social Security benefits on health care,” Hester says.

Other factors, like the cost of home insurance if you live in a coastal area (or anywhere that is likely to be severely affected by global warming), make it clear that many millennial retirees will need a large stock to stay afloat. And it’s never too early to start.

As a reminder: the most common retirement fund is a traditional, employer-sponsored 401 (k), which is funded with pre-tax dollars, and Roth 401 (k), which is funded with after-tax dollars. Both accounts allow you to automatically contribute a percentage of your retirement salary each month and earn matching from your employer’s business (last year, the average employer’s compensation in the United States was 4.7 %).

For the self-employed, contract workers, and anyone who wants a retirement fund but doesn’t have a traditional employer, there are two main options: a traditional individual retirement account (aka IRA) or a Roth IRA. With a traditional IRA, the money you contribute remains untaxed until you start withdrawing it, no later than age 72. Money in a Roth IRA, like a Roth 401 (K), is taxed now, making it the best option for people who think they’ll be in a higher tax bracket when they retire than they are now.

If saving for retirement makes you feel like you have a lot of hassle and jargon for very little reward, that’s because it does, if you don’t have specific goals in mind.

Young people may not retire in the traditional way our grandparents did, but we still need to consider the kind of life we ​​want to live in old age – and take action to create it.

“The future is impossible to predict,” says Lauren Wybar, senior financial advisor at Vanguard. “I always advise my clients to focus on what they can control, especially their spending and savings.”

Ads by money. We may be compensated if you click on this ad.A dMoney Advertisements Disclaimer

Are you looking to maximize your savings and optimize your budget?

Synchrony’s Money & Savings guide can help you focus your budget on meeting or exceeding your financial goals. Download for free by clicking below.

To start

More money :

This is what millennials can really expect from retirement, experts say

Baby boomers are postponing their retirement because of the coronavirus. Here’s why it’s a good idea

Before retiring early, complete this 6-step checklist

Source link


Leave A Reply