The first step towards retirement is obvious: start saving as much money as possible today. So, when is the best time to start saving during your career and how can you make this happen? Let’s look at a few options!
When To Start Saving For Retirement
Of course, all financial experts would suggest everyone start saving as soon as possible. For some individuals, though, this may seem like a pipe dream. The good news is today there are many different savings options offered to the younger generation. Start by saving 10% of your monthly income each month, if possible. For instance, if you put away 10% of your $5,000 of monthly income, you will have saved $6,000 for the year. This is a great start towards saving for retirement.
The experts believe beginning the savings process in your 20s will help cover for any unexpected stock market dips. Speaking of experts, Charles Schwab recently conducted a survey that concluded most Americans believe they’ll need to save $1.7 million by age 65. To meet this figure, you’d have to save a minimum of $500 per month starting at age 25.
Many 25-year-olds may find saving this amount to be a daunting task. Most in this age group are just starting out in their careers and/or raising a young family. Common sense will tell you that waiting to save money for retirement means the amount you’ll need to save each month will increase.
How To Save For Retirement
Let’s say you are out of your 20s and have yet to begin saving for retirement. The next best time to start saving money would be now! Put away any dollar amount you can afford at this point. Open a traditional IRA, which gives you more investment opportunities than a typical 401(k) plan. Keep in mind an IRA will come with a contribution limit of $6,000 for anyone under age 50.
Thankfully, there are a few different ways to save towards retirement. The easiest way to save is by putting away any unexpected or extra cash flow. This includes anything from birthday money to work bonuses. Save any extra spare change for the time being. If you wish, picking up a part-time job or side hustle can undoubtedly prove beneficial in the long run.
Here are a few simple ways you can begin saving for retirement right now:
1. Consolidate Credit Card Debt
One way to set yourself up for the future financially is by shifting some of your higher-interest credit card debt to a lower-interest debt consolidation loan. This can leave you with some additional savings to put toward your potential retirement fund(s).
2. Decrease Credit Card Debt
Yes, this may seem difficult to do, but decreasing your credit card debt as soon as possible is crucial. One tip is to pay your credit card bills in full every month to avoid any interest charges. If that simply isn’t an option for you currently, try to pay down your debt as quickly as you can.
3. Re-Consider Big Purchases
All big purchases need to be thought over a long period of time. Determine whether or not you really need this expensive vacation or home remodeling project. Consider any low-cost alternatives to your original plans, if possible. Money saved today can undoubtedly be used tomorrow.
Average Age When Americans Start Saving For Retirement
These are the average age groups when individuals typically begin saving for retirement.
- Ages 20-29: 39%
- Ages 30-39: 25%
- Ages 40-49: 15%
- Ages 50-59: 6%
*Statistics according to Morning Consult.
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