For most people, accumulating retirement savings is a long personal finance journey. The strategies that individuals use to accumulate retirement savings largely depends on the stage an individual is in. Baby Boomers, Generation X, Millennials are all striving to build up their retirement savings. However, these groups are going about this task in different ways. Accordingly, each generation is experiencing different problems when it comes to saving for retirement. As you know, being an adult comes with many responsibilities.
Unsurprisingly, 30 percent of Americans feel stressed emotionally and mentally about the topic of saving for retirement. If thinking about retirement savings gives you anxiety, you should follow these tips to ensure that you can save for the future while also living in the moment.
Start Small and Grow Your Savings
When it comes to your retirement savings, you should start small. Compound interest is incredibly important when it comes to growing your savings. Compound interest refers to any interest that you earn on the original amount that you saved. If you want to take advantage of compound interest, you need to let it accumulate over a long period of time. Therefore, you need to start saving for your retirement as soon as possible so that it will be possible to reach your goals for savings. Every decade that you delay saving for your retirement, you will need about three times more money to having as much savings in your retirement fund.
Know Your Financial Needs and Be Realistic
The amount that you need for retirement will depend on you and your needs. Calculating the amount you need to save fore retirement requires that you make many assumptions or guesses. In fact, you will need to guess how long you think you will live. According to the CNBC, about 81 percent of people in the United States do not know how much money they need to retire. The average cost of retirement is $250,000. However, 40 percent of all Americans believe that they will need $500,000 in order to retire.
Plan, Prioritize, Protect
If you want to reach your retirement savings goal, you will need to have a plan. Experts recommend that you analyze your retirement savings in the context of your monthly income. Many people feel overwhelmed when it comes to retirement savings because there are so many different accounts and options for savings. Fortunately, you don’t have to do it all alone. You can get a financial adviser to help you come up with your plan. Most financial advisers will suggest that you save 15 percent of your pay for retirement over 30 years. Of course, this is easier said than done because life is often full of unexpected surprises and costs. Therefore, you should also have an emergency fund so that you don’t have to touch your retirement savings.
Enroll in Employer-Based Plans
If your employer offers retirement plans, you should definitely take advantage of them. Before you sign up for a company-sponsored retirement plan, you should know exactly what is offered in the benefit package. You can do this by visiting HR, sending an email, or making a phone call. Don’t be afraid to ask questions and shop around. You want to compare the differences between company-sponsored retirement plans and other retirement plans that you qualify for. Millennials are the least likely to enroll with a company-provided 401k plan.
As you can see, there are many things to consider when coming up with a plan to save for retirement. As long as you follow the tips discussed above, you should have no problem saving a healthy month for your retirement without giving up on your quality of life in the present. For more information, don’t hesitate to contact us.