When millennials entered the workforce at the turn of the present century, they faced an economy impacted by the Dot.com and mortgage industry bubble collapse, and both the automotive and mortgage industries were in crisis. For this highly educated workforce, the uncontrollable economic impact would threaten to leave Millennials employed at lower wage levels - and many without the corporate benefit of a retirement plan.
Recent studies have shown that student loan burdens are at an all time high for this generation, leaving them well below previous generations when it comes to saving for retirement and building wealth.
One study, conducted by the Federal Reserve Bank of St. Louis, found that a family headed by someone born in the â€‹1980s remained 34% below a predicted level based on the wealth accumulated by earlier generations at the same age...while another study conducted by the National Institute on Retirement Security (NIRS) found that 66% of working Millennials have nothing saved for retirement.
Avoid Falling Short Of Retirement Goals
Today, due to a recovered economy and industries that are growing exponentially across nearly all market sectors, Millennials have regained economic traction and are looking for ways to ensure a successful retirement. Here are four ways you can avoid falling short of your retirement goals.
Taking Full Advantage of 401K Match
Kickstart your retirement goals by contributing the full amount allowed by your companies 401K retirement plan - up to the point of an equal match by your employer. As a popular retirement vehicle, the employee contribution limit has increased to $19,000 in 2019, with a total annual limit of $56,000 for employer plus employee contributions.
Also consider additional retirement planning vehicles such as a Roth IRA that provide generous tax breaks and has no withdrawal requirements - meaning your Roth IRA can grow tax-free well into your retirement years.
Improving Your Financial Fitness
Partner with a financial service such as We Florida Financial that combines both old-fashioned values with 21st century technology. Here you can get an accurate picture of your financial fitness and take advantage of a wide range of member financial services from first-time homeowner loans to financial services for businesses.
Improving your credit scores with credit cards and loans at a competitive rate will have a significant impact on your ability to borrow money for big ticket items that add value to your retirement plans, such as building a retirement home or traveling abroad.
Keeping an Emergency Fund
Avoid withdrawing money from your retirement saving by setting aside emergency cash for unexpected events. Car and home repairs, emergency travel, medical bills, and holiday giving should not leave you with debt that must be recovered the following year.
Keep emergency funds as cash-on-hand, in a high-yield bank account, Roth IRA contributionsâ€‹, money market, and/or certificates of deposit for fast access to money with a minimum penalty for early withdrawal.
Building Your Net Worth
Finally, spend your working years building your net worth with an investment portfolio that is outside of your retirement accounts. With today's online brokerage sites, you can gain capital appreciation from the compounded growth of a well-managed stock portfolio.
Consider your stock investments as a long-term plan for financial growth, and avoid reacting to daily fluctuations or periods of volatility. Despite the risks, stocks still offer a huge potential growth for retirement savings.
For Millennials with access to a company-provided retirement plan, saving for the future will be easier. But, even for those that must strategize a retirement plan without this benefit, it pays to partner with a financial service provider that can guide you in reaping the maximum benefits of present earnings for your retirement years.