If you’re younger than 30, your biggest concerns are probably rent or mortgage payments, the cost of a growing family, and the overwhelming amount of student loan debt. You’re young and retirement isn’t for another 30-plus years. You can worry about it later… right?
While it’s true you have long time before you retire, it’s also true that you should be saving now. What kind of retirement lifestyle do you dream of? You don’t necessarily need to save for luxury retirement communities, but you should have enough saved up so that money isn’t on the top of your worry list.
It can be hard to know just how much to save for retirement, especially when you consider inflation and other uncertain effects. The answer is different for everyone, but your calculations should include your retirement plans, your overall health and family history, and your expected lifestyle. Will you still be paying off a mortgage? Will you live in an apartment or retirement community? Will you travel as much as possible, or stay near the grandkids? The differences in your lifestyle can play a big role in how much money you’re going to need.
Start saving now.
But to start, you should be saving 10 percent of your income. If that sounds impossible, it’s not. If you’re living in a bigger house than you can afford, spending too much on clothes, entertainment, or luxury items, then make some changes. You don’t need to live in a big house to be happy (in fact, many find the opposite to be true).
Invest in the stock market.
You should also be investing in the stock market. Stock market investments are commonly for retirement, and you can set up low-risk investments that steadily earn you extra money over time. It’s best to get started with stocks under 5, and it doesn’t hurt to have someone counsel you before you buy, either. Once you have some stock market investments together, you’ll be steadily saving for the future without investing much time, at all.
Take advantage of that 401(K).
And don’t forget to take advantage of a 401(k) plan, if your employer offers it. With a 401(k) plan, part of your paycheck goes towards a retirement fund, and you don’t have to pay taxes on it until you withdraw. It’s an easy way to start saving for retirement, and it can also act as an emergency fund for future needs, if absolutely necessary.
What’s more? You may be able to withdraw money from your 401(K) as early as age 55 without penalty. Don’t want to risk it? No problem. There’s a way to take a loan from your 401(K) at any age. And as long as you pay off your loan within the set timeframe, you won’t be penalized.
Saving for retirement may sound complex and challenging, but it’s not as hard as you might think. You may need to tighten your belt and move to a smaller apartment, make smart career moves, or cut back on your spending, but you’ll be better off if you do.