By Nikki Young, CFP®,  Financial Advisor
 

As a Millennial or Gen Xer, it may seem like retirement is far away and saving for it is not a priority. But the reality is that it is important to contribute to a retirement savings account now so that you can  accumulate enough funds for a comfortable retirement.

With Americans routinely living into their 80s and 90s, it’s more important than ever to ensure your money lasts your lifetime. Millennials and Gen Xers have the advantage of time. You can benefit from compounding and the long-term investing trends that could make a real difference over the course of several decades.

A good savings target is 15% of your income. That’s a very general target, and in many cases, it’s too conservative. That can be a real challenge if you are also saving for a house and/or paying off student loans. The important point is to make a commitment to your retirement savings by contributing a consistent amount with each paycheck (or if you are self-employed, every invoice). The absolute percentage is secondary; more important is to set a goal and stick to it.

How will your lifestyle change? In retirement, you may no longer be drawing a salary, although many people take up some form of self or secondary employment that brings in an income. It’s up to you whether earnings will be part of your retirement plan. If not, your retirement savings should be robust enough to supplement your Social Security benefits without sacrificing your lifestyle. You can check you projected Social Security payments on the Social Security Administration’s website.

Time may heal all wounds. Millennials and Gen Xers, like other generations, may have unpleasant memories of the Great Recession and the personal and family turmoil it may have caused. A conservative attitude toward risk isn’t surprising given that experience but sticking to overly conservative investments has its own risks, such as not keeping up with inflation. For younger generations that have time to recover from the inevitable ups and downs of the markets, adding some aggressive investments that are more likely to have a higher return over time is a prudent consideration.

Your retirement finances are not set in stone. You have options at any age. But it’s a best practice to review your options and decide on the best course of action now. Don’t put it off your plan — the sooner you understand your financial options, the sooner you can take positive action to adequately finance your golden years.

To review or establish your unique retirement plan, I’m available to meet with you virtually, in our Herndon main office or our One Loudoun office. To schedule an initial complimentary consultation, call me at 703-828-0747, email nyoung@nwfllc.com or visit my website nyoung.nwfllc.com.
 

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC.