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Millennials, Start Saving for Retirement Now

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Dear Carrie, I’m only 25, but I keep hearing that I should be saving for retirement. Is that true? How do I get started?


It’s great that you’re thinking about this at such a young age. It’s so important, yet only 31% of young adults report saving for retirement. I know it’s hard to imagine your life 40 to 50 years from now, but it’s really important to start laying the foundation now for the life you want to live in the future. Time is your friend when it comes to saving for retirement, so take full advantage of it by starting to save now. Here are my thoughts. Does your employer offer a 401(k)? If they do, start contributing at least enough to get a company match. Otherwise, you’re walking away from free money. If you don’t have access to a 401(k), look into opening an IRA. A Roth IRA is often a good choice for young people, since you pay the taxes on your contributions now, while your tax rate is probably fairly low. Then you can take your distributions tax-free when you’re at retirement age, and likely in a higher tax bracket. Now you might be wondering, how much should I save? Try really hard to save at least 10% of your gross income, which is your income before any taxes or deductions. Here’s why that’s important. If you’re in your 20s and you continue save 10% for the next 40 years, you may never have to increase that percentage because of the power of compound growth. For example, if you start investing $500 a month for retirement when you’re 25 years old, and you earn an average annual return of 6%, you would have a million dollars by the time you’re 65 years old. But if you wait until you’re 40 to start saving the same amount, you would end up with about half as much money. Just remember, the best thing you could do for your retirement is to start saving now. I promise, your future self will thank you. For more ideas, please check out my Ask Carrie column.

If you’re in your 20s, or even older, now is the perfect time to start saving for retirement—even if it seems far away. Watch for tips on how to get started, and check out the Ask Carrie column: How Should Millennials Save for Retirement?

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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

40% of Americans wouldn’t be able to pay for a $400 emergency without selling something or borrowing money. (Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017)


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