Sunday marked the beginning of 2017's National Retirement Security Week, a national effort to raise public awareness about the importance of saving for retirement, and provide an opportunity for all of us worker bees to reflect on our personal retirement goals, and determine if we're on target to reach said goals. Oof, it's not necessarily a small order.
But, no need to hyperventilate just yet. It turns out that millennials are ahead of the game when it comes preparing for retirement. According to a 2016 study by Natixis Global Asset Management, young people are beginning their retirement-saving journey earlier than their parents did, with the average age of retirement planning beginning at just 23. What’s more, millennials responded more favorably than Generation Xers (age 35-50) and Baby Boomers (51+) to the idea of mandating both employers and employees to contribute a certain amount of money to a retirement account each month. Plus, 82% of those studied agreed that employers should be required to offer retirement plans to their employees.
While millennials are making less money than their parents did at the same age, they're also increasingly aware that retirement planning is an individual task, and that the responsibility of securing a healthy financial future lies, for better or for worse, squarely on their shoulders (hence 75% of Gen Yers wanting more information and advice on how to achieve their retirement goals).
Which brings us back to the purpose of National Retirement Security Week. The National Association of Government Defined Contribution Administrators (NAGDCA) has a bunch of great tips to guide you along your retirement savings journey—no matter where you're starting out. It's so worth taking the time to explore the resources they've put together, but if that's a stretch this week, have no fear: we'll have some content highlights for you here on The Dime, as well as on our Facebook and Twitter pages.
While we've got you, though, here are some other great pieces of advice to jumpstart your retirement planning:
Create an attachment to your future self
Saving for retirement feels so daunting because, in to other things, you're being asked to put away your hard-earned money in the here and now for some future version of yourself whom you haven't yet met. It's hard to relate to the idea of "Future You" when you're likely feeling protective of "Present You," and irritated that the "Future You" is relying on the money that "Present You" is earning today.
If you're feeling at odds with these two versions of you, it might be helpful to think of your future self as someone akin to a close friend or family member, and treat him/her as you would treat a loved one: with consideration and care. If you view your future self as a friend—someone who is just as deserving of a happy, fulfilling life as the you of today—he or she will start feeling less and less like a stranger.
Get clear about what you want your future to look like
What do you want your retirement to look like? Have you ever really stopped to think about it?
Most people are not immediately drawn to the idea of saving. After all, it involves delaying that desire for instant gratification, and, well, that can be tough. What's easier, however, is to save with a goal in mind. Yes, retirement is the goal (and we know it isn’t necessarily attainable for everyone), but that concept alone probably isn’t enough to inspire you to save—let alone inspire you to save as much as you possibly can.
So, decide what you want your retirement to look like. Try to form a clear picture of that end destination, and then work backwards to figure out the logistics (as in how much to save, how to invest it, when you're aiming to leave the working world behind, etc.).
Creating that picture in your mind lessens the chance that you’ll think about retirement as some abstract life event that's happening to someone else in another lifetime.
Get motivated by small accomplishments
There's no doubt you'll be thrilled when you've reached a place finally where retirement is a viable (and comfortable) option. But, what is going to tide you over until then? After all, that could be a 30 to 40 years away (say what?!).
It’s all about celebrating the milestones along the way.
For example, say you've been putting off rolling over your 401(k) with a previous employer into the 401(k) you have with your current employer. It may require a couple of phone calls and it may be inconvenient, but you're going to feel so good once it's all done. After all, the avoidance is usually much more painful than the action itself. And that feeling of accomplishment? 100% worth it.
Yes, in the grand scheme of things, that action is tiny. But we mention it because it represents something much larger—the fact that you're in charge of your finances, that you're being proactive, and that you're better off today than you were yesterday. And those are all YUUUGE in our book.
How do you plan to get proactive about your retirement savings journey? Share your comments below!