The American Dream has always depicted people who work hard, overcome adversity and prosper. You own your own home, have the perfect job and a loving family. Well, you may think that this image seems dated, but believe it or not, the dream still exists today; just in different terms.
Recessions, sky-rocketing technology-use, and ever changing values are more the norm today. Living debt free, saving for a comfortable retirement by 65 and having a successful career are top priorities for today’s Quarterlifer. Dan Kaldec, author of “Is the American Dream Withering or Just Changing?”
suggests, “Perhaps the newest definition of the American dream comes from the National Endowment for Financial Education, which found that nearly half of adults define the dream as a comfortable retirement. Most just want to quit work at 65 or 67 and not worry.” This is a big change from the older generations, who used to focus on homeownerships as their “American Dream.”
As a Quarterlifer, it might be difficult to prioritize your financial commitments. You may be thinking, “How can I start thinking of retirement when I’m still paying my monthly rent/mortgage, student debt, and car payments?” Although your retirement may seem light-years away, here a few key steps
you can take to start saving and preparing for your retirement.
- Begin your retirement plan as soon as possible by enrolling for your 401(k) at the first opportunity. If your job offers a 401(k) plan, take advantage of it! Make the necessary contribution so that you receive your company’s match – it’s basically free money. If you do this from the start, you’ll never miss the money. If you’re a little late enrolling, that’s okay too. It might hurt a bit at first, but it will pay off in the end when you’re ready to retire.
- If a 401(k) plan is not immediately available for you, look into funding an Individual Retirement Account (IRA). Read more about Roth IRAs, 401Ks and other investments for your retirement in our previous blog post, “To Roth or not to Roth – Wait, what?”.
- Deposit your money directly into your 401(k) or IRA before you even see it. That way, you are less tempted to spend it.
- Establish a good line of credit so that you can negotiate interest rates on loans in the future. This can be done with credit cards, but use them responsibly. Make sure to choose a credit card with the lowest annual percentage rate and features that fit your needs. (Shameless plug: Check out Delta Community’s Young Adult Visa® Credit Card)
- Don’t touch your retirement funds! If you withdraw from your retirement savings now, you'll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties.
If you still need some extra motivation to start your retirement fund, consider this: if you put $225 into post-tax investments each month from age 25, with an 8% annual return, you would have around $523,000 by age 65. On the other hand, if you put $300 into your 401(k) each month with the same return, you would have over $1 million by age 65 - and your take-home pay would be the same. Can you imagine how awesome your retirement would be? By starting small now and considering your options for retirement, you can begin to dream big in your old age whether that’s skydiving in Australia, cruising through the Caribbean, skiing in Aspen or kicking back on the couch relaxing with grandkids. Most importantly, if you have questions, ask them! Delta Community Retirement and Investment Services
has experts available to meet with you and design a financial roadmap to retirement.