Yahoo Finance 7 Key Signs Millennials Will Have Enough Saved for Retirement
A lack of savings is a common stressor for adults. Setting aside money, especially for something in the distant future, can be hard to prioritize and even harder for anyone already struggling.
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A recent survey conducted by CNBC and SurveyMonkey revealed that 53% of respondents felt behind on retirement planning and saving. If you’re feeling behind, there are ways to tell whether your savings are on track or could use a boost.
Here are seven signs that millennials will have enough saved for retirement.
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You Started Retirement Planning Early
“If you were excited at your first job out of college to see that your employer matched 401k contributions, that’s a good sign that you’re probably on the right track,” said Todd Stearn, the CEO and founder of The Money Manual.
One of the best strategies for retirement planning is to start early so that you have the power of compound interest on your side. If you started contributing to your retirement accounts with your first job, you’ve already taken the right steps to secure your financial future.
Stearn added, “One of the biggest regrets of retirees is that they waited too long to take retirement saving seriously.”
You Consistently Invest in Retirement Accounts
In addition to investing from an early age, it’s crucial that you remain consistent with your retirement contributions because every dollar matters.
Fintech product manager at Plynk, Jared Hubbard pointed out, “If you’re making consistent contributions, you’re likely taking a disciplined approach to your long-term financial wellness. Setting up monthly recurring investments may also help you stick to your plan.”
Consistent contributions to retirement accounts will likely encourage you to stay focused on your goals as you try to ignore the short-term volatility associated with the stock market.
Regardless of how much money you invest, experts agree that the sooner you start investing the money you put aside (no matter how small), the more potential your money has to grow over time.
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You Follow a Budget
Setting aside anywhere from 10% to 20% of your gross income to invest in retirement accounts won’t always be easy, and some strict budgeting may be required on your end. This is why it’s critical to create some sort of financial game plan so that you stay committed.
“If you know exactly how much money you have to spend on any costs that come up and are unlikely to be expecting a miracle windfall to take care of you in retirement, you’re on the right track,” noted Stearn.
Too many people expect a windfall or some sort of inheritance to cover their retirement, but you can’t rely on this as a financial plan for your future. You have to take accountability for your finances and plan accordingly.
If you don’t have a budget, you may want to look into budgeting apps like Rocket Money or YNAB to help you set one up that allows you to plan for retirement. Once you determine how much money you need to pay your bills and how much you should be allocating towards your retirement, you’ll be on the right path to guarantee that you can enjoy your golden years.
You Ran the Numbers for Retirement
According to Stearn, “If you’ve done the math or put the numbers through a retirement calculator, you’re on the right track because it shows you have a game plan. Retirement planning isn’t about guessing, and it helps to get detailed figures.”
If you want to be financially secure in retirement, you’ll want to work with a financial advisor and run some calculations to see what could happen with your investments at the current rate.
Luckily, you don’t have to run the numbers yourself, as there are plenty of retirement calculators available online where you can input basic details about your portfolio to determine how much you’ll need to save to reach your retirement goals.
You Have a Diversified Portfolio
“Spreading your money across a variety of different investments can help you minimize risk,” shared Hubbard.
“For example, by owning many different investments, you reduce the potential impact that a decline in one or two individual stocks or funds may have on the overall value of your investments.”
As you review your retirement portfolio, you should diversify your investments and avoid putting all your eggs in one basket.
You Have an Emergency Fund
When you dip into your retirement savings, you’re hurting your future self. Hubbard noted that most successful savers build an emergency fund covering up to six months’ living expenses, so they don’t have to rely solely on their savings to deal with unexpected expenses.
“This fund can provide a safety net for unexpected financial situations while your investments may continue to grow in the future,” said Hubbard.
You Regularly Monitor Your Investments
Moreover, Hubbard also explained, “Market conditions often change, so millennials who consistently review their investments to ensure they’re aligned with their goals are often in a better place than those who leave their investments untouched.”
You can benefit from regularly optimizing your savings and income growth strategy based on market conditions. Review your portfolio with a trusted advisor to confirm that you’re on the right track and make adjustments when necessary.
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