Jessie recently landed her first “real” job after graduating from college. She couldn’t wait to start. Her excitement turned to anxiety, however, during the human resources orientation. Talk of saving for retirement through participation in the company’s 401(k) plan sounded like a foreign language to her. “I’m only 22,” she thought. “Do I really need to be saving for retirement already?”
If you’re like Jessie — in your 20s and just starting out — you may also struggle with socking away money for a retirement decades away. After all, there are so many other things to be paying for! A place to live, transportation, gas, food, clothing, Internet and a smartphone likely take the lion’s share of your paycheck.
Don’t Shortchange Your Future Well-being
But starting now may make all the difference in retiring when you’re ready. Why work more years than you need to, just because you didn’t plan for retirement when you were young? For example, if Jessie starts contributing $200 a month at age 22 and earns an average annual return of 7 percent, she will have accumulated $758,518 when she is ready to retire at age 67. However, if she waits to start saving for retirement until she is 42 and earns the same return, she will need to contribute $936 monthly to reach the same nest egg by age 67.*
Regular saving started early can go a long way over time. That’s why it makes sense to take advantage of a 401(k) — if offered at your place of employment — when you start your first job. Many companies offer automatic enrollment and automatic contribution increase features that make participation easy. Be sure to contribute at least enough to your retirement account to get any matching contributions your employer may offer, essentially free money to you.
For more information on the benefits and options of your employer-sponsored retirement plan, talk to your plan’s administrator. To learn more about other retirement savings options, call 228-474-3427 to schedule an appointment with an NCU Wealth Management investment professional.