Many millennials understand they will share more of the retirement burden than their parents did. Many are also coping with loads of debt.
But if you keep waiting for the perfect moment to start saving, you could face a serious financial squeeze down the line.
"If I have one regret, it's that I didn't really get this until my 30s," says JJ Montanaro, certified financial planner ™ with USAA. "The younger you start, the less of a burden it should be."
So even though it seems impossible to plan for 40 or 50 years from now, it really is wise to start. Here are six things to consider:
- Time is your friend right now. Put the power of compounding returns to work. The longer you wait, the tougher it could be to save the money you will need, and you'll need to save larger amounts.
- Incorporate a "ramp-up strategy." When you get a raise, a bonus or an unexpected windfall, add a little bit more to your retirement fund.
- Don't leave money on the table. Does your employer match your 401(k) contribution? Contribute at least enough to garner that whole match. You wouldn't leave a $100 bill on the ground if you found it, Montanaro adds.
- Save even if you want to keep working. Saving now can give you the flexibility down the road to live on your own terms, Montanaro says. You may want to spend those years traveling, doing volunteer work or exploring another, less-lucrative career. Plus, what happens if you can't work anymore?
- Learn to get by with less early on. A little austerity prepares you for eventual bumps in the road. "And there are a lot more options in retirement if you're not a slave to monthly income coming in," Montanaro says.
- Make sure you also have immediate savings. Retirement might be decades away, but your next brush with a financial emergency could be right around the corner. Don't forget to build a savings account separate from what you're investing for retirement.