Tips for a Wealthy Gen-Y Retirement

Your future wealth is in your hands right now!At the tender age of 21, I began saving for retirement. If I was more financially-conscious years earlier, I would have started saving the day I was legally capable of opening an account. Since I began to think about my personal finances I’ve read dozens of articles, blogs, magazines, and books on the subject; I continue to read more every day. Thinking retrospectively, I wish the importance of saving and investing was stressed in my high school days. Though I’ve never been a big spender, at that age I never had a concept of how important growth is to accumulating wealth. Your money cannot simply sit in a savings account and subsequently provide a cushion of money for your later life. Accumulated wealth doesn’t unfold that way. Perhaps a simpler but more important concept that failed to be taught was the idea of compounding. I hope you are all educated on compounding, as I won’t get into details (if you aren’t familiar, check out The Simple Dollar’s explanation). Since opening this account, I have made a financial plan for my future, which I fully intend to accomplish (most likely once I begin a stable career post graduate school). Nevertheless, I’ve begun planning and handling my money to prepare a comfortable retirement (something that is grimly forecasted for Generation Y). If you haven’t begun already, it is never too late (but it definitely helps to start early)! Here are few (basic) tips to get you started:

1. Open a retirement account.

I’ve been amazed to hear how many people entered their 30’s, 40’s, and even 50’s without a dime towards retirement. For 20-somethings, you’re probably hoping that you’ll be in a higher tax bracket in retirement than you are now. If this is the case (although there are exceptions), a Roth IRA is right for you. In a Roth, you contribute after-tax income at your current tax rate, therefore avoiding your higher tax rate in retirement. There are several limitations on income and contributions, so before opening a Roth you should do more research to ensure it is a good fit for you.

Recommended Reading: Comparison Table from www.SavingtoInvest.com

2. Create a Budget.

What is the point of allocating your cash if you don’t know how much you need and for what? If your goal is never to touch your savings, you need to be aware of your living expenses. You should do a thorough assessment of all expenses and create a budget (a much less daunting task than many believe it to be). There are thousands of resources on the web to help you create a realistic budget that will get you on track for financial responsibility. Though budgeting is a regular responsibility, something that needs maintaining, it is a necessary part of your growth as a saver! With a budget, you can set aside enough of your income to cover expenses and any cash you want for pleasure (responsibly, of course). Anything else can be put towards your savings, retirement, or debt. There are various strategies about the order in which to contribute to these entities, and the situation varies for everyone; talk to a knowledgeable individual or a financial planner about what your best options are.

Recommended Reading: Four-Step Budget Template from Life After College

3. Read, read, read. Then adopt a plan a stick with it.

The more you read, the more you’ll be able to cater to your individual financial circumstances. Whether you start following Suze Orman, reading personal finance blogs, or listening to audiobooks, find a resource that you enjoy learning from and can effectively incorporate into your life. There is a wealth of knowledge (pun intended) out there, and the only way to absorb it is to reach out. Hopefully, if you’re like me, you’ll find that taking responsibility for your personal finances can be fun, interesting, and exciting! With time and effort you’ll see your debt (if you’ve got any) shrink, and your net worth grow. Why wait until you’re middle-aged to think about these things? Form your plan now!

Recommended Reading: Free Financial Freedom Blueprint courtesy Gen Y Wealth

These are three very basic jump-starts to your wealth-building. This list could go on and on, but there are plenty of resources out there for you to learn from. This process can be a thrilling one if you choose to make it so. You’ve got the power of your future in your hands, right now!

As there is much left to be said about this journey, please share your additional tips in the comments. We all need to learn from one another!

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14 responses to “Tips for a Wealthy Gen-Y Retirement

  • daffodilsparkle

    I am truly impressed. I can’t think about next week let alone retirement. I have never even considered putting away money for retirement, I figured that comes when I get a real real job. I mean career.

    • Eric

      Well start thinking about it! You’ve got precious time on your side right now, something you won’t have later. Thanks for checking out the blog!

  • jaysanderscpa

    Eric,

    Well thought out piece with good research. I guest teach fin lit at NYC high school and the most important take away for the kids is the law of compound interest which by the way was called the Eighth Wonder of the World by the likes of Einstein, Baruch and the Baron de Rothschild.

    Keep up the good work and let me know if you need any material.

    Jay

  • Sarah

    It’s amazing how few people our age actually understand saving for retirement or even have the desire to do it. So many of the people that I graduated with still live paycheck to paycheck without saving any money. It’s actually kind of scary, considering the shaft we’re going to get from government sponsored retirement…

  • Teacher Girl

    Wow, I am literally on my way to check out your resources that you listed now! I got scared into opening a retirement account also at age 21 after realizing that my 60 year old father and 50 year old mother have absolutely NO retirement plan. They have nothing save, and not even a company plan to back them up. I have no idea what they are going to do in the future and I knew that couldn’t be me. Even though I started a retirement account though, I still don’t feel like I have been responsible enough with budgeting and making sure I know how much money I need. I gotta get this under control asap. Alright, off to do research of my own! Thanks for the great resources =)

  • Amanda

    Great post! I’ve actually been saving up to open an IRA later this year. We can definitely learn from our parents’ mistakes, and quite honestly with the financial cards our generation is being dealt, we have to.

  • Jenny Blake

    Thank you so much for including my template in this post — I’m honored! Love the tips 😀

  • Robin

    I agree – I think it’s very important for people especially our age to realize the importance of this and not wait until tomorrow to do it!

  • Stephanie

    Yay! All great points! I’ve definitely hooked on personal finance blogs and books. 🙂

    And I also am always surprised that some people still haven’t started saving for retirement. Especially people in their 40s and older. What the heck?

  • daffodilsparkle

    I wake up every morning and say to myself “self, today is the day you create a budget for yourself and stick to it” …never happens

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