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HomeBlog RetirementSix things a Millennial Needs to do to Retire Rich
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Six things a Millennial Needs to do to Retire Rich

May 8, 2016 by National Debt Relief

Manager working diligently on the computerWhen you’re young, full of energy, footloose and fancy free it’s tough to think about retirement. After all, as a millennial you’re probably close to four decades from retiring. As tempting as it might be to put off saving for those golden years you have one big factor working in your favor – time. And if you don’t start taking advantage of it now, it’s likely that you won’t be able to retire when you had hoped and it may be under less-than-ideal circumstances. In fact, one study estimates that today’s college grads won’t be able to retire until they are 75 as compared with today’s average retirement age of 62. If working until you’re 75 doesn’t sound very appealing there are six things you need to do to retire rich.

1. Create a budget that prioritizes retirement savings

We understand it’s hard to save money what with student loan debt and rising rents but you need to make saving for retirement a part of your financial planning as soon as you can. You may feel a little pain now from tightening your budget to squeeze out some savings but this is much better than realizing only too late that you haven’t saved enough.

The best rule of thumb

The best rule of thumb is to try to save 10% to 15% of your take-home pay for retirement. However, it is okay to save less. Saving a little bit of money every month – if that’s all you can do – is better than not saving anything. One financial expert suggests that you start by saving five dollars every month until you’re comfortable with this and then add something more. When you start small like this it’s likely you won’t even notice the money is gone.

Saving something for retirement sooner is even better than saving more later on. For example let’s say you’re 30 years old. If you could save $100 now and then add another hundred dollars to this every month for the next 35 years you’ll have $142,302, assuming you can get a modest 6% annualized return. But if you wait until you reach 40 to start saving and even double your savings to $200 a month, you’ll end up with only $138,825 – at age 65.

2. Capture your employer’s 401(k) match

If your employer offers a 401(k) and will match your contributions up to a certain percentage, this is where you should first start saving. And you should, without question, put enough in your account to capture the company match. As an example of this let’s say your employer contributes fifty cents for every dollar you contribute up to 6% of your salary, which is pretty common. This means you should defer that same 6% to your 401(k). Your savings will then add up to about 9% of your pay – the 3% from your employer and the 6% from you. That would leave you something short of the goal of saving 10% to 15% of your salary but would certainly be close enoiugh.

3. Start a Roth IRA

If your employer doesn’t offer a 401(k) or if you have maximized the contributions to your 401(k) then you should start a Roth IRA. It’s different from a traditional IRA because the money you put in is taxable income but you can withdraw money from it at any time and without paying any taxes or penalty. While you would definitely not want to withdraw money from your Roth IRA until you reach retirement it’s sort of nice to know that the money will be there in the event of a serious financial emergency.

Most banks and brokerages will help you open a Roth IRA. However, spoiler alert – you must have earned income from a job and if you’re single have a household modified adjusted gross income of less than $132,000. That figure goes to $194,000 if you’re married and are filing jointly. The maximum you can contribute to a Roth IRA is $5500 a year. However, once you reach age 50 that jumps to $6500.

The following video explains more about an IRA and makes the case that it’s the smartest way by far to save for retirement.

4. Automate it

You can put your savings on autopilot, which is the easiest way to save each month. If you have a 401(k), your employer will move pretax dollars out of your paycheck before you even see the money. If you’re saving money through a Roth IRA, you should take advantage of automation by setting up automatic transfers from your bank to your brokerage account. The sad fact is that if you rely on yourself to put money in your savings account manually, it just may not happen. But when you automate your savings you eliminate the temptation to spend that money and it guarantees you will be paying yourself first.

5. Invest carefully

It’s important for a millennial to make smart investments within a 401(k) or Roth IRA. At this point you should probably stick with funds. And choose ones that have low expense ratios so you will get a bigger return over the long run. One of the best and safest way to invest is with index funds across a variety of asset classes to ensure diversification. Of course, because you’re young you can afford to take some risks so you might consider also building a portfolio of 80% to 100% stocks.

6. Boost your savings on a regular basis

Last but certainly not least be sure to boost your savings regularly until you reach the 10% to 15% level. For example, every time you get a raise you could boost your savings. You can also do this anytime you earn extra income such as bonuses.

It’s just not that complicated

See, retiring rich for a millennial is not all that complicated. Do the six things you just read in this article and it’s practically guaranteed that you’ll have a nice, stress-free retirement and not one where you’ll be working part-time when you’re 70 because you failed to save enough for those golden years.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/24/2021 Charlotte: Before I begin, I have to let you know that our call may be recorded. Can you tell me, how did you first hear about our National Debt Relief? JOAN: Oh, I don't know. I don't remember. I don't know how I heard about it. Charlotte: What made you decide to work with them? JOAN: Well, obviously, I needed to consolidate my debt. Charlotte: Tell me about the service program that they provided you with. JOAN: Well, I'm not done. But for me, it’s costly. What I did not like about it was that they add on. They say it's going to be X amount of dollars. But then what they do is they say, “Oh, well, we found another creditor that you need to…” So that'll be at a different part of the month and I don't like staggered bills. If I'm gonna pay a bill, whether it's to the phone company, the insurance company, whatever it might be, I want to pay that bill once a month. That's the only drawback. Charlotte: So let me get this. Normally, they are collecting the bills upfront. And then they work to get them paid off at a different rate. So everything wasn't collected all at once, if that's what I'm hearing correctly. JOAN: No, no, no. Every month, money is taken out of your account. And they pay X amount of dollars. Like let's say you owe $5,000 with Citibank, $500 in Credit One, whatever. They work out a deal with them and then they say, “Well, you have to pay $350 a month.” And they'll pay $20 a month towards -- they give you like around about how long it's going to take. Two years, two and a half years. And then they work it out that way. Charlotte: Now, what did you think about your negotiator? JOAN: I don't know. I just called up. It's a completely different department. So when you call up to sign up, it's very different. I don't remember that. It's just that they collected all the information. It was easy for me. I didn't have to go through and find whatever bills I wanted to put in the debt relief. They did that. Charlotte: So say you have questions or concerns. How did you get your questions or concerns addressed? JOAN: I would just ask and they answered it. They're very helpful like that. They'll answer any questions you have. And if they don’t know, they will find out. Charlotte: So was there not a particular person that you spoke with? JOAN: No, you don’t have one person that you deal with that just handles your account. Once you do – they’re like headhunters. Until you sign up, you're going to have that one person and even other people calling. Once your name is out there, they're going to keep calling you. So, once you sign up, then it's whoever answers the phone. It’s customer service. Charlotte: How comfortable did you feel working with National Debt Relief through this process? JOAN: I felt very comfortable, very safe. I was not worried about anything. Charlotte: Is there anything about this process that you would have liked to seen handled differently? JOAN: Yes. The way the payments come out. I'd rather have them one instead of … Charlotte: Everywhere. JOAN: Right. Well, not everywhere. For the most part, the bulk of them were. But then if there's one here, one there, they don't just extend it to another payment. And then the payments change, like the payment amount. You could pay $20 for six months, and then all of a sudden, it's $80 for the next three months, so you really don't know. Charlotte: So if you have to rate this experience on a scale of one to five, five is you’d recommend to friends, one you're pretty dissatisfied… JOAN: No. I would definitely recommend it to a friend. Charlotte: How would you say working with National Debt Relief has impact your life? JOAN: Well, it did help until I hit a speed bump. I'm in the middle of a divorce and my husband closed our checking account, of course. But so far, as a matter of fact, that's why I thought you were calling. I have to postpone the next month, so hopefully, they'll be able to postpone it, because I've been postponing it for a few months. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Because you did give us some really good feedback. JOAN: Yes, but not using my name. Charlotte: Okay, I will make it anonymous for you. I will also send over a link so that you can have it as a record for yourself at jdola20@yahoo.com. JOAN: Yes, but do not put that public. Charlotte: Oh, no, no, no. That doesn't go public. Definitely. How would you say working with National Debt Relief has impact your life. JOAN: Well, really, it would have helped if I could have stayed on the program. Charlotte: We’re recorded.

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