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Tips for saving for retirement in your 20s
Don’t wait to develop good financial habits
 
Published Thursday, August 7, 2014 6:00 am
by StatePoint

In your 20s, you may think you have all the time in the world to save for retirement. You may just be entering the workforce, and thoughts of exiting are far off. Your spending priorities are different, and it can be tempting to spend your entire paycheck. However, now is the best time to create financial habits that could boost your retirement readiness in the future.

Your age is your biggest advantage in your 20s.  Saving early gives you the opportunity to make your money work for you with compounding interest.

 “Many young people need education and one-on-one support to help them get on track and stay on track with retirement savings goals,” says Chuck Cornelio, president of Retirement Plan Services for Lincoln Financial Group. 

Cornelio offers tips to help young people take action and save for retirement:

• Start Now: One of the easiest ways to save for retirement is through an employer-sponsored retirement plan, like a 401(k) or 403(b) plan. Whether you’re starting a new job or interviewing for one, check out the retirement plan benefits offered by your employer. And as soon as it’s available to you, enroll. If your company doesn’t offer an employer-sponsored retirement plan, consider saving in an individual retirement account (IRA). Most local banks have an IRA solution that could work for you.

• Save to the match or beyond: If you are fortunate enough to have an employer that will match your contributions up to a certain percentage, save at least up to that match amount. When you don’t take full advantage of a company match, you’re leaving money on the table.

• Create a budget: For many, entering adulthood means managing one’s own finances for the first time. Along with saving for an emergency fund, create a monthly budget that allows you to save a small percentage towards your retirement savings plan.  A few dollars from every paycheck can make a big difference down the road.

• Resist taking money from yourself: Life happens, and you may need cash to pay for unexpected expenses. During these times, you may be tempted to borrow against your retirement savings or take the money out altogether. By doing so, you may miss out on potential market gains. You could also incur taxes and penalties for money withdrawn or for not paying back a loan.

• Make more, save more: The more you earn, the more you should save. When you receive an extra bump in cash from a bonus, pay raise or another pleasant surprise, consider putting that money towards your retirement savings.

• Seek help: You may need help with identifying the investment options and savings goals that are right for you.  Schedule an initial meeting with a financial professional and then commit to annual check-ups to talk about your savings progress. A Lincoln Financial Group participant satisfaction survey found that retirement confidence increases with access to guidance from a financial professional, such as a retirement consultant.

For more savings tips, visit www.LincolnFinancial.com. Once you start saving, you’ll feel good about the progress you’re making towards boosting your retirement readiness.

Comments

The best chance to retire on your terms is to start planning and saving/investing early in life, do it with every paycheck and take advantage of any opportunity to increase your nest egg (employer matching plans, catch up contributions when you reach 50,etc.). While this may be difficult for some, many others don't think or prepare for retirement until they are almost there. The site Retirement And Good Living provides information on investing, planning, downsizing, frugal living. retirement locations and man other retirement topics that can help those who are planning for retirement or are already retired.
Posted on August 7, 2014
 

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