“Hey, Dad! What should people my age be doing for retirement?”
Such a challenging question deserves much thought. And since I helped bring her into this world, she deserves a response from both my brain and my heart.
My first reaction is that my 20-something daughter is off to a good start by asking advice from someone she trusts. She will be well served throughout her life by seeking financial counsel from people who are both knowledgeable and trustworthy. However, she might be surprised to learn that I don’t think saving for retirement should have the highest priority on the list of steps to take for the people in the 20 to 30 age range. Here’s what I think is important in a young person’s journey to working towards a comfortable retirement:
- Spend less than you make. It’s very important to live well within your means. Drive your cars into the ground, avoid eating out too often and pay cash for everything. If you’re able to make every dollar you spend count, you’ll also be able to build up an emergency fund. If you ignore the rest of what I suggest but apply this one habit, you’ll be further ahead than you could have imagined.
- Stay healthy. One of the best things you can do for your retirement is to establish healthy eating and exercise habits. Doing so may decrease the likelihood of depleting your financial resources on high medical and long-term care expenses in retirement.
- Invest for the long term. At a minimum, consider contributing up to your employer’s match on a 401(k). If you’re self-employed, the pre-tax contributions limits are quite generous for a Simplified Employee Pension Individual Retirement Account (SEP IRA). Remaining consistent with your investments may reduce both taxes and expenses. And by beginning early and steadily saving, you’ll be saving slowly and less tempted to invest in dubious “get rich quick” schemes.
- Choose your career with great care. If you don’t make much money or are in a declining industry, it’s hard to save for retirement. Remember, if you’re fortunate enough to find a career that you love, with colleagues whom you admire, you’ll never work a day in your life.
While the steps I’ve suggested are not easy, they can be worked towards. This leads me to my last bit of advice: take time each day to appreciate the actions you’re taking toward a comfortable retirement.
Written by Delta Community Retirement & Investment Services LPL Financial Advisor, Shaun M. Crawley, CFP®.
Delta Community Retirement & Investment Services offers access to investment strategy, retirement advice and a range of financial services, combined with access to financial planning resources through our relationship with LPL Financial.
Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The investment products sold through LPL Financial are not insured Delta Community Credit Union deposits and are not NCUA insured. These products are not obligations of Delta Community Credit Union and are not endorsed, recommended or guaranteed by Delta Community Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Delta Community Credit Union and Delta Community Retirement & Investment Services are not registered broker/dealers and are not affiliated with LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.