Telling young people to save money for retirement sometimes falls of deaf ears. A young college graduate is concerned about finding a job they like. Millennials tend to choose jobs where work life balance is more important than making money. So how do we get them to think about their future without compromising their ideals and wants for their current life.
Once you find a job and have been at it for a year, a person usually wants to buy a new car. They saved money for their down payment and now are paying monthly bills they never had to a new car. With a new car payment each month, they will want to try to save the same amount they did for their new car, to buy a house. Saving to buy a house takes a lot more time than when buying a car, but they shouldn’t cut back on their savings account even though they are now paying an extra bill each month. Perhaps the young person finds a new job with a higher salary three to five after graduation. Their apartment rent and car payment are no longer a struggle, and they add more to their savings account each month for that starter house they want. During this time, they need to start planning for retirement. They are comfortably living wanting to be a home owner but they need to save for retirement.
If your company matches what you put in a 401K up to a certain percentage of your salary every year, then that is what young people should do. Don’t put in $20 a paycheck or 2% of your monthly salary; go for the maximum amount of 401K matching. If life gets them down and they can’t afford to keep putting a lot of money in their personal savings, that’s ok, just make sure the 401K is still growing. The house will eventually come, and so will the tax breaks as you get older.
Buying a house and having children is part of most people’s life plans. Once you reach the point of having children, retirement is not as far away as you think it is. Use a savings plan for your children’s college fund, invest in companies or things you think will give you a good return on your investment, and always keep adding to your 401K. Growing up is hard, stressful, hectic, and challenging, why would you want to grow old with those same issues?