Retirement Planning for Millennials Struggling Financially
January 25, 2022
JANUARY 25, 2022: Born between 1981 and 1996, many millennials are starting to enter the stage of life where adults begin to worry whether they will have enough money to live during their retirement years. For millennials who are struggling financially, the prospect of retiring in 20 or 30 years may be a frightening one. The good news is that there is still time to adjust your retirement strategy.
Retirement Strategy
While it is true that younger workers have the advantage of having more time to save for retirement, older workers usually have higher salaries and less debt. No matter how bleak your financial picture currently looks, there are steps you can take to start building your retirement fund.
How Can a Poor Person Save for Retirement?
A small amount of savings is better than no savings at all, so even if all you can manage right now is to put aside one percent of your income, start doing it. Take advantage of automated tools, such as direct deposits or automatic transfers to savings accounts, to automatically deposit whatever amount you decide on into your savings account before you spend money on anything else.
Gradually increase your savings by paying off high-interest debt and cutting unnecessary expenses. However, continue to prioritize growing your wealth over paying off your debt. Track your expenses for three months. Look for unnecessary spending, such as subscription services you rarely use. Cut these expenses and either funnel the money you save into your retirement account or use it to pay off high-interest debt so that you can direct your monthly debt payments into your retirement account.
How Should a 30-Year-Old Invest for Retirement?
Contributing the maximum amount to your 401(k) is a key part of your retirement strategy. When you get your annual raise, put that straight into your retirement account. If you can't afford to max out your contribution, aim to at least put in the maximum amount that your employer will match. Otherwise, you are giving up free money.
If you are already maxing out your 401(k), open an IRA account. Invest aggressively. Put 80-90% of your portfolio into a diverse collection of stocks. You still have enough time before retirement to weather market downturns. Don't go crazy on super high-risk investments, but don't play it too safe either. If company stock is part of your portfolio, keep it at 10% or less. You don't want to depend too heavily on one stock to fund your retirement. If you change jobs, don't cash out your retirement fund.
Getting a late start on your retirement savings isn't ideal, but it isn't fatal. You still have time to financially recover. The key is to start saving and investing now and leave the money alone until it is time to retire.
About 1891 Financial Life
At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.
Our portfolio is extensive, ranging from various life insurance policies to our MYGA to support your financial needs no matter what stage of life you’re in. For more information, contact us at info@1891FinancialLife.com