Retirement savings are important for every generation. Your personal journey, financial portfolio, and spending priorities affect your ability to save, though. Despite the challenges you face, you can save enough money for your future whether you’re a Baby Boomer, Generation Xer or Millennial.
Here are 7 tips to boost your retirement savings and allow you to enjoy life today.
1. Start saving early
Delay retirement saving by 10 years, and you’ll have to contribute three times the normal amount to your savings as you make up for the decade of saving you lost. Start today to save for your future as you maximize your retirement savings contributions.
2. Think small
You can save enough money for retirement without going broke today. Thanks to compound interest, your small, regular retirement savings contributions grow quickly.
Compound interest is explained as interest on interest. Your initial deposit or principal earns interest. Interest is then calculated on the new total amount and so on. As the interest compounds on your savings, your retirement accounts grow.
3. Know how much you need to save for retirement
A CNBC report found that 81 percent of Americans have no idea how much money they’ll need for retirement. Additionally, four in 10 Americans underestimate their need by $250,000. Maybe you, too, have no clue about how much to save. You may have chosen a random figure or decided to save the same amount as your parents, kids or coworkers.
Instead of guessing, calculate your personalized savings goal. In general, your specific goal depends on your life expectancy, projected retirement lifestyle and current spending and savings habits. Review these factors as you decide exactly how much money to save.
4. Plan, prioritize and protect your investments
No matter where you’re at on your retirement savings journey, it’s easy to feel overwhelmed as you think about how much money you should save. The three Ps of retirement savings - plan, prioritize and protect - help you confidently achieve your goals.
Plan: Many experts suggest that you save 15 percent of your annual income for retirement. However, your needs may vary. Your customized savings plan outlines your retirement goals and includes specific details such as how much money you really need to save and the types of retirement accounts that offer maximum yields.
Prioritize: You may love shiny toys or have a family to support, but you also need to prioritize your future. Consider ways you can cut expenses or increase your income now as you prioritize retirement savings in your budget.
Protect: Resist the temptation to use your retirement savings for other expenses. Save an emergency fund to cover unexpected expenses so you can preserve your retirement savings for their intended purpose.
5. Enroll in your employer’s retirement savings plan
Many employers offer retirement savings plans and may even match a percentage of the funds you save. Millennials are eight percent less likely than other generations to enroll in their employer’s 401k plan. You owe it to your future self to save now, though. Ask your supervisor or Human Resources staff for details about how you can enroll in your employer’s retirement plan.
6. Get help from a financial expert
While you’re an expert in your chosen career, you may not know much about retirement savings. More than seven in 10 MIllennials admit that they don’t know as much about retirement savings as they should, but fewer than four in 10 ask for assistance from a professional.
Ask for help as you plan for your future. A professional financial advisor explains details about retirement savings, helps you discern your goals and advises you about the options that fit your needs.
At any age, you can successfully plan for retirement with these tips in the infographic below. See how you compare to your peers and other generations.