Before they even start their professional lives many in the millennial generation are saddled with student loan and credit card debt. While they understand that they should pay this debt off as quickly as possible, many of them also believe they should not start saving for retirement until the debt is gone.
That approach, unfortunately, puts them at risk of not having enough savings for their retirement years.
Recently, U.S. News & World Report offered some debt reduction and savings advice for millennials in "How to Balance Debt Reduction and Retirement Savings."
The tips include:
- Avoid High Interest Debt – Getting out from high interest debts, such as credit cards, as quickly as possible allows people to save more for retirement.
- 401(K) Matching – If your employer offers a 401(K) matching program, no matter how small, take advantage of it.
- Buy Cars With Cash – Saving money to buy a car for cash instead of financing the car purchase is a good way to have extra money for retirement.
- Be Realistic – It is important to set realistic goals about how much money you will need for retirement.
- Be Aggressive – The younger you are, the more aggressive you should be with investments.
Once millennials do start saving for retirement appropriately, they will also need to get estate plans that detail how those savings should be distributed should something happen to the savers.
It is never too early to save for retirement and it is never too early to get an estate plan.
Reference: U.S. News & World Report (Jan. 22, 2016) "How to Balance Debt Reduction and Retirement Savings ."