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It's fairly common for people of the millennial generation to be of the mind-set, "What's the big deal? We're only in our 20s. We have plenty of time to save for retirement." But as we ease into our 30s, it may be time to adopt a slightly more grown-up view of retirement and financial planning. This article is aimed at providing millennials with an overview of retirement security while acknowledging the special economic challenges they face. Steps discussed include beginning retirement saving early; understanding the plan; increasing deferrals over time; taking advantage of retirement savings estimate tools; appreciating the power of compound interest; resisting the temptation to tap retirement savings for other purposes (e.g., hardship distributions); and keeping plan beneficiary designations up to date. Together, these steps will help move millennials down the path to increased retirement security.
When I say "millennials," you may think of smartphones, multitasking, Internet memes and online acronyms. Retirement is near the bottom of the list of words you associate with millennials. Fair enough. As with any other generation, many are concerned that my generation of millennials will not be prepared for retirement. While we have some admirable characteristics, retirement planning savvy may not be one of them. Millennials are currently referred to as "the lost generation" or "the generation who won't ever retire." While this may strike fear into some hearts, let's keep this in perspective: The millennial generation generally includes those born between 1982 and the early 2000s. When the lower end of a generation is still in junior high and high school, how is that a fair accusation? And to be fair, what prior generation rolled into their 30s labeled as "the generation already prepared for retirement?"
It's fairly common for people of the millennial generation to be of the mind-set, "What's the big deal? We're only in our 20s. We have plenty of time to save for retirement." But as we ease into our 30s, it may be time to adopt a slightly more grown-up view of retirement and financial planning.
I recently polled a group of my friends, other millennials who work in a variety of industries, to see what sort of questions they had about retirement savings and planning. The responses were...