Millennials are a generation that seems to be getting it hard everywhere they look. Despite being tech-savvy and hardworking, they’re earning about 20 percent less than the previous generation. Recent research by the British think tank, Resolution Foundation puts millennials on track to becoming “the first generation to earn less than the one before.”
It’s no wonder that Generation Y balks at the idea of retiring and consider it an elusive goal to achieve. But that doesn’t have to be the case. Daniel Orfin owner of the financial planning firm Daniel Orfin & Associates believes that with proper planning, millennials can enjoy a comfortable retirement when the time comes. His objective to help clients eliminate as much confusion as possible in planning their financial future inspires the following tips for millennials pondering their retirement prospects.
1. Stop Living Paycheck-to-Paycheck
No matter how high the cost of living and how low your income is, there are ways to cut down costs, find cheaper alternatives, and manage to save some money every week. The point here is not how much you’re saving, even a few dollars a week are a good start, rather, it’s about learning to be financially disciplined and organized. With a calculator and pen and paper, sit down and track your spending. Find which gaping holes are draining your income. You’d be surprised how trivial things like coffee and cab fares can eat up a big chunk of your paycheck.
2. Invest More in Your Retirement Accounts
As the retirement age of millennials gets pushed further and further into old age, it makes more sense to start saving for retirement as early as you can. Daniel Orfin & Associates’ mission of helping customers achieve their long-term financial objective by keeping things simple and
utilizing a safety-first approach gives millennials valuable insight when preparing for retirement. One of the easiest things you can do to boost your retirement savings is to match your company’s contribution to your retirement account. Even a couple of hundred dollars saved in your twenties can become a few thousands by the time you hang up your hat. The sooner you start, the less the portion of your income you’d need to invest down the line.
3. Take Inflation into Account
Inflation is a fact of life. With time prices go up and the buying power of your savings goes down. This inescapable fact must be factored into your calculations as you plan for retirement. It is also one of the pillars of Daniel Orfin & Associates’ financial strategy. As the years go by, all investments must account for inflation to be profitable. Keep that in mind as you set your goal. It will help you know exactly how much you’ll need to save to have a comfortable life in your golden years.
4. Set Manageable Goalposts
If you need help to figure out your retirement goal, you can use an online retirement calculator. It gives you an idea about what age you can expect to retire, how much you need to invest, and what your retirement goal should be. Once you’ve come up with a round figure that you aim for, it’s time to set milestones along the way. Usually, that comes down to simple arithmetic where you set manageable goalposts and work toward achieving each target within the allocated time. According to Daniel Orfin & Associates, this method helps you stay focused on your mission, makes it easier to invest, and reduces the impact of investment risks and setbacks. Every time you reach a milestone, you’ll get the motivation and psychological rewards to stay the course.
Daniel Orfin & Associates concludes that while retirement can seem like it is a long way away, not having a plan in place can make the time before retirement even longer and with less funds during retirement for leisure.