Saving for retirement requires time and commitment and is considered investing in yourself. “Saving for retirement is very important,” said Nicole Covganka, financial planner from the Retirement Planning Group. “We are all responsible for ourselves and our retirement.”
Covganka suggested saving for retirement should be an interest for all, regardless of what age you are, and debating about doing it shouldn’t be an option. “Social security replaces approximately only 20 percent of your income,” she said. “If it’s around for the next 40 years, [ask yourself], ‘Can we afford to live off of 20 percent of the pay we are making?’ Today most people would say no,” she said. “To make up for that difference, we need to save on our own to make up the 80 percent that social security will not provide.”
A little is said to go a long way, and Covganka mentioned that if an individual enjoys the lifestyle they live now, they’re going to want to enjoy that same lifestyle when they do retire.
“No matter what situation you’re in, we always recommend having three to six months of living expenses in your savings and because you have to start somewhere. Maintain a low cost of living and do your best to stay out of debt,” Covganka said.
For people who are unemployed, she advises, “The biggest recommendation is to try not to tap into any retirement savings that you’ve established.”
Saving for retirement requires a plan and a set strategy. “Starting first with a plan, writing down your goals to engage a financial advisor who has experience in helping people with a comprehensive financial plan,” Covganka said.
Cara Newman, editor at Young Money magazine online and quarterly print publication, said, “[When it comes to saving for retirement], the younger you are the better because of compound interest. Compound interest is earning interest on your interest, and it will enable you to save a lot of money, and starting early can allow an individual to secure their retirement.”
She recommended that mutual funds are a good way to make sure you have enough diversification in your retirement.
“Our content at [Young Money] focuses on personal finance, investing, careers and entrepreneurship,” said Newman, stating that the goal of the publication is to help people change their behavior.
In addition to that, she said saving for retirement and learning to invest are good habits to start. “Starting to save for retirement is one of the smartest things you could do. Save anything, even the smallest bit helps,” she said.
Newman said to become educated about your financial future that young people should contact their human resources department at their jobs about a retirement plan, read tons of books and do a search on basic investment information.
Nicole Covganka’s Steps to Saving for Retirement:
1.) Participate in your employee savings plan if they have one because there are tax benefits to participating.
2.) Stay out of debt.
3.) Postpone gratification (weighing out the needs vs. the wants).
4.) Always pay yourself first.
For more information, visit youngmoneymagazine.com.
