It can be difficult for millennial women to look ahead and plan for retirement. In fact, Merrill Edge reports that millennials are not saving for retirement, but rather 63 percent are saving toward desired lifestyle goals.
Here are three actions you can take now to be financially independent in the future.
Begin by choosing a fixed percentage of your paycheck and directing it straight into a retirement account.
The goal is to save at least 10 percent of your income and, ultimately, to max out the annual limit on contributions to the account. If you need a little extra motivation, consider that you don’t have to give up a full dollar of take-home pay to add a dollar to your account, primarily because your contribution is pre-tax. You may benefit even more if your employer offers a match of retirement contributions.
When it comes to financial planning, it’s best to pretend you’re solely responsible for your financial future even if you’re married and your spouse makes great money — or you have another form of financial support.
It’s uncomfortable, but it can be beneficial to imagine worst-case scenarios such as being widowed without sufficient life insurance or divorced with an inadequate settlement. If you’re single, imagine you will remain single forever and won’t have a second paycheck or Social Security spousal benefits as an option to improve your finances.
When you consider these types of scenarios in your retirement strategy early in life, your plan has great potential to help you retire in the lifestyle you desire. Any financial luck you encounter down the road will be icing on the cake, and you will avoid being dependent on anyone or anything to achieve your financial goals.
Life can change quickly and so can your financial situation. You might decide to start a business or become a stay-at-home mom. You could someday find yourself in an income-reduced situation or in a job you’ve outgrown. Farther in the future, you may be faced with the possibility of becoming a caregiver to an older loved one and having to take time away from your career.
No matter your income level, it’s possible to achieve financial stability with careful planning.
Start by reviewing your company’s retirement offerings. Consider additional retirement plans like Roth IRAs, and create your own financial spreadsheet with a budget and balance sheet. Finally, a financial professional may be able to help you develop a plan that can bring clarity and confidence to your financial life today and during your retirement.
Learn more about how we can help you work toward your retirement goals.