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5 Things Every Millennial Should Know About Saving For Retirement – Bankrate.com

Retirement can seem so far away that you might not want to think about it. But for millennials, it shouldn’t be an afterthought since they have the best money-making asset on their side — time.

Millennials, or those born b…….

Retirement can seem so far away that you might not want to think about it. But for millennials, it shouldn’t be an afterthought since they have the best money-making asset on their side — time.

Millennials, or those born between 1981 and 1996, aren’t as far away from their retirement years as you might think. The oldest millennials are now more than 40 years old. With full retirement age at 67, they might not yet be fully on track when it comes to saving for retirement, diversifying their investment portfolio, and taking advantage of every benefit now while they still can.

Here’s what millennials need to know about planning for retirement.

1. Save now (even if you don’t think you should)

For something that feels so far away, it’s easy to put off retirement savings and planning. But the more you save now, the less stressed your future self is likely to be.

You can do it, through:

  1. An IRA. If you have nothing else, open an IRA account with a robo-advisor and make auto payments to your account every month. Even $10 or $20 — which seems small — can add up over time. You can use a traditional or Roth IRA — the biggest difference is how you’re taxed. If you think you’ll retire in a higher tax bracket, go with a Roth IRA, which takes after-tax contributions and that’s more money in your pocket when you eventually start deductions. Otherwise, go with a traditional IRA, but keep in mind that your withdrawals will be taxed when it comes time to take the money out.
  2. A savings account. While dedicated retirement accounts are one of the best ways to boost your funds, they’re not the only way. You can also make incremental contributions to a high-yield savings account. The best savings accounts now offer interest rates above 1 percent, but that fluctuates with market conditions.
  3. Additional income. Get a bonus? Add it to your savings. Finish paying off a debt, like a car payment or student loans? Add those payments to your investment account. Did you pick up a side hustle? Use it to pay off debt sooner and stash some of it away in your retirement accounts. Big contributions are great but aren’t always feasible, especially when you have other obligations right now. Use what you have on hand to make small, smart contributions.

Here’s how much you should have saved for each age. 

2. Diversify everything you can

There’s no one way to save for retirement. You can have a work-sponsored 401(k) as well as an IRA. You can have a taxable investment …….

Source: https://www.bankrate.com/retirement/millennials-things-to-know-retirement/

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