If you are a young adult in your 20’s, retirement probably seems like a lifetime away, and there are so many demands on your money right now. Reports indicate that a majority of millennials do not have long-term savings or retirement plans.
As a financial advisor in DC, I urge young workers to consider this: the financial independence that comes with retirement planning allows you to control when you retire and the quality of lifestyle you can support.
Saving for retirement is an investment in your future that can be done while still maintaining a healthy work-play balance. Here are five steps you can take to get started:
1. Learn how to budget.
A budget is a financial plan for spending and budgeting is a process used to manage expenses. It is not merely a tool for keeping track of every penny spent. It is a strategy that allows you to prepare for the unexpected. With a smart budget, you will be able to save and invest in your financial future.
2. Commit to a 52-week savings plan
Set modest but regular savings targets and make sure that you meet them. If you get an early start on developing a savings habit, the financial discipline required to reach larger milestones will come more quickly. If your employer offers a direct deposit for your paycheck, use it. You will be less tempted to take some cash from your deposit.
Finally, don’t forget the emergency plan. Set aside money to cover unexpected life events and expenses like unreimbursed medical bills and auto or home repairs. Try to save a year’s worth of expenses.
3. Use credit cards wisely.
Avoid becoming a victim of credit card debt – where your balance is higher than your ability to pay it off. Substituting credit for cash often creates a vicious cycle that can be hard to escape. Unsustainable debt can affect your ability to get a mortgage or even a job. Many employers check the credit reports of potential
4. Review your credit report
Know your credit status. The three credit bureaus — Experian, TransUnion, and Equifax — provide one free report annually. Request one at AnnualCreditReport.com, and check it every year to avoid problems when you need access to credit.
5. Get professional advice.
The best financial advisors will help you develop a savings plan that is compatible with your budget, your current situation, and your lifestyle goals. An advisor can also identify specific problem areas and help you work out ways to move forward. Finding financial stability early in your life and career can be the key to successful long-term planning and retirement. Often, all it takes is a little to earn a lot.
No matter what your age or circumstance, retirement should be part of your long-term financial plan. When you are ready to talk about your future, contact me.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.