Tough economic conditions over the recent past has led many in the millennial generation to focus more on funding near term needs than on retirement planning. This generation is mostly comprised of children from Baby Boomers with birth dates ranging somewhere from the early-1980s to the late-1990s. According to a recent survey, more than half of those under the age of 30 are unemployed. This includes 14% of those who graduated from college between 2006 and 2010. A recent article posted by Paula Aven Gladych offered some helpful guidance that this generation can use to initiate the retirement planning process. Here are the 12 tips that she shares:
1. If your employer offers a plan, get to know it.
2. No one else is going to fund your retirement…contribute, contribute, contribute.
3. Consider a Roth IRA. Contributions go into the account after taxes have been taken out. That means you can withdraw your earnings tax free when you reach retirement age.
4. Increase your deferral percentage every time you get a raise.
5. Establish an IRA.
6. Take advantage of an employer match to your 401(k). It is free money.
7. Consider your own risk tolerance and take into account the amount of time you have until retirement.
8. Know when you will be 100 percent vested in your account. That’s how long you should stay with your current employer.
9. Don’t treat your 401(k) like a glorified savings account.
10. Even if your plan allows them, don’t take loans against your 401(k) account.
11. Move your accounts with you when you change jobs.
12. Budget and live within your means.