By Jon Bacon, CFP®

According to the National Institute on Retirement Security, 66 percent of working millennials have nothing saved for retirement. Crushing student loans, part-time jobs (and therefore no access to a company retirement plan), and layoffs are just some of the factors preventing millennials from saving for retirement.

Having gone through the Great Recession, 20- and 30-year-olds might feel hopeless when looking ahead toward retirement. But all is certainly not lost. There are small steps you can take now to prepare yourself for retirement. Just saving a little bit can make a huge difference. Right now, you have time on your side and can take advantage of compound interest. The younger you are, the more time you have for your money to grow. If you keep saving and investing, your net worth will keep growing. Because of compounding, the growth will accelerate.

Below, we include more ways you can save for retirement starting now:



1.     Enroll in your company’s retirement plan

Signing up for your employer’s retirement plan, such as a 401(k), is a great way to automate your savings. If a 401(k) plan isn’t an option for you, look into other tax-advantaged retirement savings vehicles, such as a Roth IRA, traditional IRA, or SEP IRA.

2.     Take advantage of employer benefits

Find out if your employer offers a health savings account, dependent care savings account, and flexible savings account. These benefits will reduce your taxable income and increase your ability to save more. Also, find out if your employer offers a 401(k) match so you can take advantage of this essentially free money.

3.     Ask for a raise

According to salary site, only 37 percent of millennials have ever asked for a raise, but nearly half of those who did got the desired hike. What you earn now has a lasting impact on your wealth. The typical worker’s wages grow the most between ages 25 and 35. A pay boost of $5,000 when you’re 25 adds up to $634,000 more in lifetime earnings.

4.     Increase your earnings potential

Acquire skills or certifications that can enhance your value or diversify your experience. Attend conferences, events, or training sessions that can lead to new opportunities.

5.     Gradually increase your 401(k) contribution

Raise the amount you contribute to your retirement plan over time. If you have any money left over after paying bills at the end of the month, consider putting that into savings instead of spending it. As you get annual raises, increase your savings.

6.     Understand your options if you switch jobs or terminate employment

If you switch jobs or terminate employment, you can leave the money in the former employer’s plan; roll over assets to the new employer’s plan; roll over assets to an IRA; or cash out. Consider speaking with a financial professional and tax advisor about your options.



7.     Start budgeting and recordkeeping

There are plenty of apps and online tools to help you budget. By budgeting and tracking your spending, you can make adjustments and set aside extra money for your retirement savings.

8.     Maintain a healthy credit score

By having a healthy credit score, you can get benefits like higher credit limits, lower interest rates on mortgages and auto loans, and lower premiums on auto and home insurance.

9.     Get a financial education

It’s important to understand where your money is going. Read personal finance books and/or take personal finance courses. Explore getting professional advice from an accountant and wealth manager.

10.  Picture your future self to get into a savings mindset

Picturing your future self can put you in a savings mindset. When Prudential Retirement installed a photo kiosk to let employees see what they might look like at 65, the number who enrolled in the retirement plan or hiked contributions rose 60 percent from the previous year.

11.  Set up an emergency fund

Set aside enough money to cover three to six months’ worth of your expenses; avoid dipping into your 401(k) for emergencies. Open a high-yield savings account to start building your emergency savings. This is better than using credit cards when money gets tight.

12.  Review your insurance needs

Consider life insurance, especially if you have young children. Life insurance can help your family maintain their lifestyle and protect your assets if you were to pass away. To protect your paycheck in the event of an accident or extended illness, look into options for long-term disability insurance. Consult a financial professional to determine the best option for you.



13.  Balance saving and paying off student loans

A third of millennials say that student loan debt is delaying them from saving for retirement, according to an Investor Protection Institute survey. Be sure to balance saving for retirement and paying off loans.

14.  Avoid or pay off credit card debt

If you have high-interest credit card debt, pay this off first. Then, look at your other debts and decide the most effective way to repay them. Pay off your highest rate of debt with bonuses and raises. Keep living expenses to a minimum.

Harris Financial Advisors is here to help

Even though retirement may seem far away, start saving today and find a way to save a little more. Establishing good savings habits now will help you throughout life and into retirement. A financial advisor can help you map out a plan to help meet your long-term financial goals.

Reach out to Harris Financial Advisors today to review your retirement plan.