How Even Young People Can (and Should) Start Planning for Their Retirement

You’re never too young to start planning for how you will financially support yourself in retirement. And contrary to what many think, you don’t need to be rolling in dough to get started. There are likely one or two simple steps you can take even if you don’t make much money.

Smart money management is about your spending and saving habits, but it is also a mindset. At the very least, you can start envisioning a future lifestyle you hope to achieve, as well as afford, and then create a roadmap from there.

Why Some Millennials Are in a Better Position to Retire Than Older People

Some good news first: Millennials are getting some important things right from a financial standpoint. That’s because people in their 30s and early 40s started saving cash sooner than Gen Xers and Baby Boomers by contributing to a 401(k) at a younger age. According to recent rule changes, people of all ages can take out as much as $1,000 from their 401(k) without penalty to help cover the cost of an unforeseeable emergency or urgent expense (provided they meet certain criteria).

Furthermore, according to one study, Millennials earning $61,000 are already on track to meet their spending needs in retirement. And if you aren’t one of those people, you’re still young! You have lots of time to figure this stuff out and lay the groundwork to support yourself decades from now.

Questions to Ask Yourself Now to Start Preparing for Your Retirement

A young couple living paycheck to paycheck might understandably wonder: why think about retirement when you have so many expenses to cover now? Raising a child or putting yourself through school, that voice can be even louder. The answer is that smart money habits begin with how we think about money. If you can set aside a few dollars each week – great! That money will start to add up and can provide a cushion in case you have an urgent medical need.

In the meantime, begin asking yourself some basic questions. They will help you start envisioning where you are now, where you want to be in the future, and a financially wise path for getting there. Some of these questions include:

1. Are you satisfied with your work? Is there a different job you would like to pursue eventually?
2. Does your current lifestyle line up with your income (or incomes if you are a couple)?
3. When you imagine your lifestyle in ten or twenty years, do you feel headed in the right direction?
4. Are you focused on the values that matter to you most right now?
5. Are you currently able to live off of what you make, or do you need to think about making changes such as getting a raise or seeking a better position?
6. Are you financially organized or does your money situation feel chaotic at times?
7. Would you be able to pay off a $250 bill this month if something urgent came up?
8. Is there credit card debt or some other debt that you could start paying off, little by little?

All of that said, don’t be too hard on yourself! Most people become stressed about how to support themselves at some point in their lives, and we can’t predict what the future will hold. If thinking about retirement at your age seems unhelpful or too much of a burden right now, then don’t!

Otherwise, by taking a step back and reviewing your situation from a more neutral and less emotional position, it may be easier to see some of the smaller adjustments that are possible today. Omitting a minor expense each week or taking a free job skills training workshop at a community college may not seem like a game changer, but those are the kinds of steps that help regular folks feel more positive about their present, and therefore their financial future.

Anyone Can Use Smart Money Services at Illinois Currency Exchanges

Retirement planning can be complicated, but creating smart money habits doesn’t have to be. No matter your age, there are many financial and auto-related services at Currency Exchanges throughout Illinois and the surrounding areas. By going online or stopping by the location nearest to you, you will discover lots of smart, safe and convenient ways to stay on top of your finances today.

Give us a call to find out what your local CCEA Currency Exchange can do for you today!