study by TruStage<\/a>, an insurance and finance company, nearly a quarter of middle-class Americans have not started saving for retirement, and low incomes and urgent expenses are cited as the impediments.<\/p>\nWe asked financial advisers for their best tips on saving for retirement, and broke down their advice by life stages. The overarching message was save early, but that it\u2019s also never too late to start. <\/p>\n
In your 20s? Time is on your side<\/p>\n
When it comes to clients in their 20s, \u201cwhat we stress to them is the biggest thing they have on their side is time,\u201d Byrne said. \u201cThe power of compound interest cannot be overstated to folks who are in their 20s or getting started.\u201d<\/p>\n
Money that\u2019s put away early has more years to grow before you reach retirement age. Byrne said a Roth IRA, a retirement account where compound earnings come out tax free, \u201cis just a super powerful component to being financially independent when you\u2019re older.\u201d<\/p>\n
She said one benefit of starting to save at a young age is it simply gets you into the habit of doing it. Another thing she tells people early on is to have patience; it takes a lot of time for interest on savings to grow.<\/p>\n
Ethan Richard, a financial adviser for Investment Concepts in Lewiston, tells clients to think about someone driving steadily in the right lane on the highway. They\u2019ve left themselves enough time, have a plan and probably know the best way to get there.<\/p>\n
\u201cThat\u2019s how I think about investing with different age groups,\u201d he said. \u201cThe earlier on you create a plan and give yourself time to get there, then you can settle for an easier ride realistically.\u201d <\/p>\n
He agrees that younger people seem more on top of financial planning. While millennials and Gen X were limited to classes or books, Gen Z has endless information available on more digestible sources like podcasts and TikTok. They\u2019re growing up with stock-trading apps like Robinhood.<\/p>\n
\u201cAs technology has developed, we just have so many effective resources available to us,\u201d Richard said. \u201cYou\u2019ve got 30-second videos that can sum up what a Roth IRA is or how a company match works.\u201d <\/p>\n
In your 30s and 40s? It\u2019s all adding up<\/p>\n
Life in your 30s and 40s is typically defined by big milestones like marriage, buying a house and having children. Financial experts say hopefully by your 30s one of those milestones is a job with benefits like a 401(k) account.<\/p>\n
Byrne said ideally by this point, people have learned the importance of saving, and are using their employer\u2019s benefits to the best use, meaning they are at least getting the maximum match on their 401(k).<\/p>\n
She said folks without a retirement plan at work should be making regular payments into a Roth IRA on their own. <\/p>\n
Your 40s can be where a lot adds up: day care and child care costs, cars, housing expenses. Byrne said it\u2019s important to keep putting in the money needed to get the maximum match contributed by an employer. Paycheck after paycheck, it will add up.<\/p>\n
\u201cOne of the things we preach to our clients regardless of age is the most important thing is time in the market as opposed to trying to time the market,\u201d Richard said. <\/p>\n
In your 50s and 60s? Set realistic goals<\/p>\n
The 50s are often when clients are faced with taking care of aging parents and continuing to raise children. <\/p>\n
But Byrne said for people who began saving earlier, their 50s are likely when they begin to see the compound interest take hold. They\u2019ve hopefully had the maximum 401(k) match working for them for years.<\/p>\n
\u201cMost all of this really starts to converge into a successful nest egg, but it takes a long time,\u201d Byrne said. \u201cIf you\u2019ve done all of this throughout, people between 55-65, they come to me and say, \u2018Wow, this is really going to work.’\u201d<\/p>\n
She said for most people, if they\u2019ve been saving all along, it\u2019s simply a math equation. If you\u2019ve been putting money away for 40-50 years, the interest earned is going to be more than what you\u2019re adding to it.<\/p>\n
Richard said he hears from a lot of people who don\u2019t believe they\u2019ll be able to retire. He said part of the conversation sometimes is tempering expectations and setting realistic goals.<\/p>\n
\u201cIf you\u2019re someone who has made $50,000 your entire career, you can\u2019t expect to have a luxurious retirement, unless you save and invest aggressively,\u201d he said.<\/p>\n
Feeling behind?<\/p>\n
Byrne said her outline through the decades would \u201cbe the perfect arc\u201d for someone planning for retirement, but she knows it\u2019s difficult for people to save or feel like they are saving enough.<\/p>\n
A lot of people are working hard, with sometimes more than one job, and still struggling to meet everyday needs, let alone saving. A recent Wall Street Journal article said Gen Xers are heading toward retirement age despite carrying the highest average balance in student loans<\/a> of any age group. <\/p>\nFor those who may be worried that they started too late, Byrne said, \u201cEverybody starts at zero; it\u2019s never too late.\u201d<\/p>\n
\u201cEven just starting a little bit, it makes you feel a little better,\u201d she said, adding that stress over money is the \u201cmost visceral stress there is.\u201d<\/p>\n
\u201cIt\u2019s with you every minute every day,\u201d she said. \u201cAny sort of nest egg that you have that you can rely on in difficult times is going to alleviate stress. Even if it\u2019s $5 a week in a coffee can in case you need new tires, it\u2019s an important place to start.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Christine Byrne is seeing a lot of 20-somethings walk into her office at Back Cove Financial in Falmouth.…\n","protected":false},"author":2,"featured_media":220119,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185],"class_list":{"0":"post-220118","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/220118","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=220118"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/220118\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/220119"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=220118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=220118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=220118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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