For millennials, one of the biggest advantages they face when planning for retirement is this: Time.
Most millennials are in the sweet spot of working – meaning they are in their 20s and 30s. This is the perfect time to start planning for retirement because there is still time to save, save and save some more!
Unlike Baby Boomers or Generation X – who are older and don’t have as much time to amass retirement savings – millennials are poised for success.
So what retirement plans are best for the millennial workforce? Luckily, there are several options.
The best place to stash your retirement cash is a tax-advantaged retirement account. That’s an IRA or a 401(k). What this means is, you can grow your retirement nest egg and you don’t pay taxes UNTIL it’s time to take the money out.
Not everyone has the ability to save with a 401(k) since they are offered by an employer, so if you are self-employed or don’t have an employer with a retirement benefits package, an IRA is a great place to start.
The two plans are very similar, although there are a few differences, like fees, employer matching and more, but generally, if you start saving early and often, both plans are similar enough to get you a good head start.
It’s also best for millennial workers to invest in the stock market, as part of a diversified strategy. The good news about the market is, you have time to weather its inevitable ups and downs, so it’s OK to take a few risks at this age.
Overall, those who invest in the stock market DO make money over time. So, for millennials, investing in the market over 30-40 years makes a lot of sense.
It’s also important to have a savings account should something happen, like a death or job loss. This isn’t really a part of your retirement savings plan, but it’s something to consider when you are figuring out a budget and savings.
The end of the year is a great time to think about starting a retirement savings plan, as there can be tax benefits and deductions that can help you start 2019 with a bang.
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If you have other questions about retirement savings plans, email us or call 937.308.0758.
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