Are Millennials Prepared for Retirement?

Are Millennials Prepared for Retirement?

Individuals 23 to 39 make up the largest portion of the U.S. labor force. The future of retirement is, literally, the future of millennials. Between paying bills, spiking rent prices, and crushing student loan payments, it’s no surprise that millennials are finding it increasingly difficult to save for retirement. According to the National Institute of Retirement Security, 66% of working millennials have nothing saved for retirement. Instead, they’re busy paying down debt and covering their general living expenses while saving for retirement is pushed to the bottom of their priority list.

At Unity Catholic, we are committed to the financial security of our members, which is why we’ve put together this five-step guide to setting your retirement up for success. 

1. If You Haven’t Yet, Start Now: A retirement account is destined to gradually grow over a long period of time, so the earlier you begin contributing to it, the better. Retirement plans are built on compound interest, which works best when you start early and save consistently. Just a small amount regularly and automatically contributed may add up to a lot over time.
   When looking at contributions, a 401(k) is the first place you should start, especially if your company matches a portion of your contributions. A company match is essentially free money and a guaranteed return on your investment. If your company does not offer a 401(k), an Independent Retirement Account is a great alternative. No matter the route you decide to take, remember that the more you save, the faster you earn. 

2. Educate yourself: Gain the knowledge you need to make informed decisions about retirement investing whether you take a do-it-yourself approach or choose to consult a financial professional. The more you know, the better able you'll be to develop a strategy that will help you to build the lifestyle in retirement that you desire. At Unity Catholic, we have a number of professionals and tools, such as our financial education courses, that can help you to make informed decisions on your financial future.
   

3. Understand your Spending: Pay attention to where your money goes. These days Millennials are spending more on coffee than on retirement. Additionally, do your research with those big-life purchases. Housing and transportation are two of the biggest costs you'll face over time. Before signing a lease or buying a home or car, think about the long-term costs and how they might impact your financial goals.
   

4. Ask for Help: Know what you don't know and ask for help if you need it. A financial professional can help you calculate your retirement savings needs and develop a well-defined strategy based on how long you have to invest, your goals for the future, and your changing needs. Don't forget to periodically update your strategy as your goals and circumstances will change over time.
   

5. Increase your contributions over time: By increasing contributions to your retirement plan or account, you'll help reduce your current taxable income, lower your current tax bill and potentially reach your retirement goals sooner. Also, remember inflation impacts your retirement savings. You may feel like you’re saving enough to maintain your current lifestyle. Even though your income may increase over the years, so will your cost of living (typically). If you spend $50,000 a year to live in today’s dollars, for example, how much more will it take 30 years from now?

You may not have it all figured out yet, and that's okay! Just remember to start somewhere.  At Unity Catholic CU, we are here to help you build the future you’ve been dreaming of. Invest today, enjoy your retirement tomorrow.