The oldest Millennials are nearing 40; the youngest are in their early 20s. They’ve surpassed their Baby Boomer parents in sheer numbers. Collectively, they have significantly more student loan debt than their previous generation. The demise of pension plans and the uncertainty of Social Security mean Millenials may need to save more money than their parents did to fund their retirement years. Getting an early start can make a big difference.
The Goal: Financial Security
Financial independence means having enough income to pay your expenses throughout your lifetime. Saving as much of your salary as possible – especially during your early working years when you may not have the financial responsibilities of a family or mortgage – can help you get there. Establish goals for different stages of your life – a down payment on a house, college for your children or funding your retirement. Although your objectives may changes as your reach some goals and add others, your priority is to have enough money to live comfortably.
Create an Emergency Fund
At every stage of life, make sure you have enough money in an emergency fund to cover at least six months’ worth of living expenses or an unexpected bill. Having money in a dedicated fund can eliminate the need to sell investments or use a high interest credit card to cover the expense.
Join the Plan
Start contributing to your employer’s 401(k) or other tax-deferred retirement plan as soon as you’re eligible. Plan contributions come out of your pay before taxes are taken out, and you won’t owe taxes on contributions or earnings until you withdraw the funds, typically at retirement. Your employer may match your contributions up to a certain percentage, so be sure to take advantage of this “free money.”
Open an IRA
If your employer doesn’t offer a retirement plan, consider putting money into a traditional or Roth individual retirement account (IRA). A traditional IRA’s earnings grow tax-deferred while qualified withdrawals from a Roth IRA are tax-free. Having an IRA can be beneficial even when you have a retirement plan at work. (Contribution limits apply.)
Your financial professional can help you work toward your budget and investment goals.
Crane Investment Services advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), Member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Broker Services, Inc., is a registered broker/dealer in all fifty States of the United States of America.