Are you a working millennial? If so, you are now part of the highly educated and largest generation currently in the workforce. Some of the unique financial challenges you and your peers face include student debt, slow wage growth, world-wide competition for jobs and the possible future reduction of federal benefits.
A typical millennial will finance his or her own retirement since pension plans are on the decline. Retirement might be a long duration since life expectancy is rising. Millennials will be working hard to manage finances throughout their careers and retirement. Here are some tips to build wealth and maintain financial independence.
Hone Your Skills
Make sure that you continue to have a variety of up-to-date skills to offer employers. Technology is quickly changing and by pursuing continuing education you will be able to keep your edge over others in your chosen field.
Be Ready for a Rainy Day
Things happen in lives that are out of our control. Data shows that over 75% of adults in their 50s experience a layoff, health problems, divorce, the loss of a spouse, or the need to care for a parent. We can’t control family emergencies or housing prices, but we can control how prepared we are for emergencies. Contribute to an emergency savings account to be ready for life’s ups and downs. The professional life of a millennial is likely to be interrupted by career changes. If you return to school to alter career paths for example, you may experience periods of time without might have a time without steady income. An emergency fund that can cover your living expenses for several months is important.
Squirrel Away Money for Retirement from the Beginning
Saving for your retirement is your responsibility. The more disciplined and diligent you are, the better off you will be in retirement. Employer-sponsored 401(k) plans transfer the responsibility of saving to the employee. Although you may feel like you are an eternity from retirement, it is crucial that you use time and compound interest to your benefit.
A recommended retirement plan can result in financial freedom if saving begins early enough. If you start by age 25 and sock away 4%-9% of your pre-tax income into retirement accounts every year you should be on the right track. Higher income millennials should be able to stand saving 9%-14%; and the highest income millennials should be able to save 14%-18%. A qualified financial advisor can give advice on comprehensive wealth management Los Angeles and other locations.
Let retirement funds accumulate
Most millennials will be in several jobs in their lifetimes. It might be tempting to cash out your retirement plan, especially if you are a long way from retirement, but please consider rolling over employer-sponsored retirement plan money into an Individual Retirement Account (IRA) or a new company retirement plan. Cashing the plan will make it immediately taxable, and there might be stiff penalty for early withdrawal. It may also be impossible to make up for the money spent.
Be Wary of Credit
Credit cards offer are extremely convenient and easy to obtain, but as many a young person has found out, their overuse can lead to major debt problems. Paying off the entire balance each month is highly recommended.
Plan Now for the Future
The savings that millennials accumulate during their working years is likely to be their primary source of retirement income. Beginning saving early, optimizing 401(k) contributions and after-tax savings, with practical and steady investing, will help millennials meet their retirement needs.
The above advice for millennials is also very good advice for any one today. I’ve seen so many individuals who started to save for retirement later in life and now must continue to work. Many others got caught in the credit card trap trying to keep up with their friends. One major problem today is very high student loan debt & many millennials are suffering from this. Some opted for a high priced degree only to find no available jobs in that field. The economy for the past eight or ten years has taken its toll on so many individuals and it’s not over yet I’m sorry to say. Good post and good advice for all, not just the millennials.
When it comes to saving, there are several things you need to consider. Don’t just save for this day or year but keep in mind your future. It is always important that you are always already when unexpected things happen. It will give you relief knowing that you have the means.