For most twenty-somethings, saving for retirement is typically far far down their priority list. After all, it’s tough to get motivated preparing for an event that won’t arrive for 30 or 40 years.
Heck, I know thirty-somethings and even a few forty-somethings who admit that they still have trouble setting aside a portion of their income for their golden years.
Are you well on the road to saving for a comfortable retirement, or does your retirement savings account balance sheet currently show five figures or less including the two digits to the right of the decimal place? If it’s the latter, then it’s time for a reality check.
Here are a few tips that I’ve tried to follow over the years that should help motivate you twenty-somethings to stop procrastinating and start building your retirement savings as efficiently as possible (although many of these apply to us older folks too):
Time is an ally of the young; don’t waste it. Compounding growth is the miracle that allows people of even modest means to build Brobdingnagian nest eggs. Albert Einstein supposedly called it the most powerful force in the universe; what he didn’t say was the power’s maximum potential can only be unleashed by diligent investors with long time horizons.
Don’t leave money on the table. Most employers who offer a 401(k) plan typically provide a company match up to a certain percentage of your contributions. That’s free money; so don’t leave it on the table!
Saving is easier when you make more money. If your retirement savings aren’t growing as quickly as you’d like, then increase your income via a side hustle or second job. And if you don’t have the time, then try finding a roommate to help defray the rent or mortgage.
Make retirement saving painless (Part 2). Every time you get a raise, be sure to allocate at least half of it to increase your paychecks retirement deduction. It’s a great way to boost your retirement contributions over time.
Don’t get discouraged. It takes most people decades to build a nest egg large enough to retire comfortably. Just remember, the odds are it will be a bumpy ride getting there; your retirement savings balance will most likely suffer from periodic market shocks that may result in large but temporary losses.
Make retirement saving painless (Part 3). Instead of using your bonus or any other unexpected financial windfall to satisfy some need for short-term gratification, put it into your retirement account.
Don’t count on Social Security. I don’t care what those annual future-benefits statements you get from the Social Security Administration say. Unless there are big changes, the odds are that the Social Security Trust Fund will probably be broke before you retire.
Be aggressive. Remember, there are no guarantees in life; but if you want high returns, you have to take bigger risks. The good news is younger investors have the luxury of time to help them recover from potential losses that may result from chasing higher returns; older investors don’t.
Don’t forget the wealth insurance. Financially responsible people don’t buy precious metals to make money — they do it to protect the wealth they already have. Buying one or two troy ounces of silver every month — or a few grams of gold — will help preserve your wealth if an unexpected currency devaluation or catastrophic currency failure occurs.
Nobody cares about your retirement more than you do. Ultimately, your retirement is your responsibility. Like it or not, that means the only person you can count on to feather your nest egg is you. So get to work.
Photo Credit: bernadette macpherson morris