My retirement journey started as most peoples; on Google, with questions like “how much do I need to retire?” and “how much should I have saved for retirement by age?”.
After weeks of tedious overwhelming research, I decided to share the details of my research in an easily digestible infographic. Retirement savings is a personal journey and strategies can vary widely depending on what stage of life individuals are in. Although Millennials, Generation X, and Baby Boomers are all trying to accomplish the same end goal, they are going about it in different ways and each generation is struggling with its own unique problems.
Being an adult has a laundry list of responsibilities. Retirement savings always is included on this list but often times get less attention than it deserves due to unexpected life events or temptations of shiny new objects. It should not be a surprise then that three in ten Americans report feeling stressed both mentally and emotionally about preparing for retirement. The topic of retirement savings should not trigger a mild panic attack.
Instead of panic attack, check out these easy to follow tips to make sure your future you can live in the moment and also be saving for the future.
Start small and grow your savings
The magic word is compound interest, which, in its most basic terms means that interest is earned on both the original amount saved plus the interest earned on that savings. The key to making compound interest work most efficiently is to let compound interest do its work over a long period of time. Starting to save for retirement as early as possible is the easiest thing you can do to make sure you reach your savings goals. For every ten year, you delay saving for retirement, you’ll need at least three times as much to catch up.
Know your financial needs, be realistic
There is no magic number out there when it comes to how much you need for retirement. Calculating how much you will need for retirement requires many guesses or assumptions including how long you think you might live. It’s no surprise that CNBC reports that 81 percent of Americans don’t know how much they need to retire. Forty percent of Americans estimate that they will need $500k to retire which is about 250k short of the average retirement cost.
Adhere to the 3 Ps - plan, prioritize, protect
Having a retirement plan is crucial to reach your savings goals. Experts suggest analyzing your savings based off of monthly income that your savings can provide. With all the different options and accounts for saving, it’s easy to feel overwhelmed. You don’t have to go it alone; financial advisers can help you map out your plan. On the most basic level, it is suggested that people save 15% of their pay over a thirty-year period.
It’s inevitable that life happens and often times life can be full of unexpected costs. Don’t let these unexpected expenses derail your retirement savings. It is crucial that people have also saved for an emergency fund so that you can keep your retirement savings safe.
Enroll in Employer-Based Plans
One of the easiest and effective ways to save for retirement at any age is to take advantage of company-sponsored retirement plans. If you are unclear if your company offers this in their benefits package, send email, make a phone call, or pay a visit to HR. Millennial are 8% less likely to be enrolled with a company provided 401k plan.
If You Don’t Know Ask
Are you afraid of looking dumb because you’re asking for help in finding the best ways to effectively plan for retirement? Unfortunately, many workers report that they would like financial retirement help but often do not actively seek it. In fact, 72% of Millennials admit they do not know as much as they should about retirement savings and yet only 36% actually get help from a professional financial advisor.
Below is our infographic, which contains more insightful data on retirement. See how your retirement planning stacks up against your peers.