With all the hype about the silver tsunami of baby boomers leaving government soon, planning for retirement might be the last thing on millennials’ minds. But while no one wants to think about growing old, it’s important that young professionals start thinking about how they’re going to save for retirement, even if just starting out in your careers.
For previous generations, retiring by age 65 with a nice pension was practically a guarantee. But even if you’re working in government now, this concept of retirement is a little more uncertain. In fact, a recent report found that 83 percent of millennials plan to work during their retirement.
And with social security benefits not being so certain, funding for retirement falls squarely on our broad, strapping millennial shoulders. If you’re starting to panic, don’t worry. First 5 gathered these tips that you can apply now to help you save for retirement.
- Depend on yourself. Many baby boomers spend their entire working lives counting on a future stream of income from Social Security, a pension or both. But when government and pension providers created such programs, they didn’t count on people retiring at 65 and spending 30-plus years in retirement, which is becoming more and more common. That means it’s up to you to save. Start saving at least 15-20 percent of your income now. And if you have debt, paying that down counts toward your 15-20 percent savings goal.
- Plan to work longer. Let’s face it, a 30-year plus retirement seems a little extreme and would be a financial challenge for most Americans. Now it’s time to think of working longer to live more. Instead of saving all of your travel and leisure goals for retirement, start pursuing them now and plan to work a little longer, even at least part-time.
- Evaluate your financial health often. With adequate planning, you can have the life you want and deserve after retirement. Time is your biggest asset. Create a budget for monthly savings and stick to it, even if it just starts out at $20 a month. Educate yourself about what’s out there. Research your 401 (k) options and make sure you’re up to date on Federal Employees Retirement System (FERS) and the Thrift Savings Plan (TSP). For government, you have a number of options between FERS, Social Security and TSP. And don’t depend on the government benefits to get you through. Explore all options.
- Plan for home ownership. While trends show that the majority of millennials are shying away from buying homes, home ownership is still a viable path to secure retirement. Owning a home as soon as possible and continuing over time could give you the opportunity to unlock the wealth potential of such homes in retirement, even if there are downturns in the market.
- Take advantage of financial apps. We are the technological generation, after all. Smartphone apps and all our favorite devices can actually help us plan better for retirement. Apps like Acorns, for example, have an intuitive, easy-to-use interface and digital-only execution. Such apps help you calculate how much to save each month and automatically synch with your accounts to help you put money aside each month for retirement. You don’t even have to enter a bank branch or advisor’s office so you can save and plan for retirement from the comfort of your smartphone
- Learn from other millennials. You might be thinking with student loans, rent and all your other immediate expenses, how can you possibly think of retirement right now? Believe it or not, other millennials are going through the same financial struggles. It can help to share tips and best practices for saving. Gabby Dunn, from Buzzfeed, has a helpful podcast, “Bad With Money,” that can educate you while comforting you during your financial woes.
For more reading on how to plan for your retirement, check out GovLoop’s latest articles:
- Are You Ready for Retirement?
- Navigating Your Federal Retirement: Your Successful Passage into Financial Freedom
For more reading about millennials in public service, check out this weekly GovLoop series, First 5: Advice from millennial to millennial