Day 7: Check in with your retirement savings. This post is part of FORBES’ 30 Days of Money.
Two types of Millennial retirement stories tend to capture the public imagination. On one end are accounts of the frugal-genius who retired at 30 after paying off a Mount Everest of debt in a year. My colleagues Laura Shin and Lauren Gensler have covered these folks extensively and well. There is much to learn from such mavericks, but for most super-early-retirement is not a realistic choice.
Opposite are the 20-somethings who shun the concept of saving. Few personal finance nerds will soon forget the Elite Daily story late last year that exclaimed, “If you have a 401(k) your life is just K.” I will not link to the post for fear of further spreading the virus. Instead read this response: “The Single Worst Piece Of Money Advice A 20-Something Will Ever Receive.”
In the vast middle are tried and true strategies for retiring in your 60s or 70s with enough money to live on, perhaps modestly, for as long as you need it. Below I’ve compiled Forbes stories on how and why to save for retirement as soon as possible.
If you know you should be saving, but aren’t sure where to start …
Read: 10 Things You Absolutely Need To Know About 401ks, IRAs And Other Retirement Accounts and then Start Now: A Step By Step, Tough Love Guide To Saving For Retirement In Your 20s and then maybe ‘What The Heck Is A 401k?’ And Other Investing Questions You’re Too Embarrassed To Ask
Then: Write out the steps you need to take to start your retirement fund and complete one step each week until your retirement account is funded, your cash invested and your savings rate is set to auto-escalate.
If you have a 401(k) and don’t know what to invest in …
Read: Panic Never Pays: An Age-Based Guide To Preparing For Market Chaosand 10 Things You Absolutely Need To Know About Funds and ETFs
Then: Ask your HR department for a list of funds available in your 401(k) plan. Remember, saving something and investing it somewhere are far more important than precisely what you are invested in, especially if you are young.
If you’ve invested enough in your 401(k) to get your employer match and expect to earn more money in retirement than you do right now …
Then: Check if your employer offers a Roth 401(k). If not, open a Roth IRA.
If you were auto-enrolled into a target date fund, but aren’t sure how you feel about it …
Read: Is The Self-Driving Car In Your 401(k) Setting Your Portfolio Up For A Crash? and Target Date Funds Are Setting Up Millennials For A Stock Market Shock–And Some Don’t Even Know It
Then: See “If you have a 401(k) and don’t know what to invest in …” above. Also ask if your 401(k) has a brokerage window, which allows you to invest in the full universe of funds and securities. Note that substantial savings may be needed to justify the cost.
If you are concerned the funds you are invested in are too expensive (and you probably should be) …
Then: Figure out what you are paying in fees. Many 401(k) providers make this tough but tools like FeeX and Personal Capital’s financial dashboard make it easier.
If you left a 401(k) with an old employer …
Then: Rollover your old 401(k).
If you don’t have a 401(k), need to rollover an old one or can save more than the $18,000 401(k) contribution limit …
Read: Don’t Wait For Obama’s MyRA: The Best Places To Save For Retirement If You Make Less Than Six Figures and, especially if you want investment advice, The Price Of Free: The Good, The Bad And The Ugly Of Investing And Saving Options For The 99%
Then: Open an account.
If you aren’t sure which savings goal to prioritize …
Then: Plan to increase your retirement savings rate by 1% every year or six-months so you can start saving for other goals sooner.
True, there are real and scary retirement challenges our generation will be forced to address. Such as, the fact that people are living longer but not always working longer, concerns about the long term viability of social security and questions regarding how to contend with the rising cost of college. That’s not to mention the current conundrum of balancing Millennial’s own student loan payments with retirement savings.
That said, if you follow the advice here you’ll be better off than not.
This post is part of FORBES’ 30 Days of Money. Follow along on Twitter with#30DaysOfMoney. Also check out Millennial Money.
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