Recently, I found myself sitting in front of a dental practice with about 30 employees, talking to them about saving for retirement.
Seeing the looks on their faces and hearing the questions they asked made it hit home with me – again– how hard it is to save money, especially when you’re young.
The amount of financial responsibility a young person can have, with rent, car payments, and college debt, to name a few, can be overwhelming. The idea of not using every penny of your paycheck to support your daily needs, but to instead push those funds to your retirement can seem almost irrational.
I understand that feeling. However, the most important time to save is when you’re young, because this allows your savings to compound interest and work harder for you over your lifetime.
A comment I get frequently when I speak to employees is, “I’ll never be able to retire. I’m going to always work.”
Maybe. But maybe not. J.P. Morgan Asset Management has some interesting data in their guides to retirement about managing expectations around your ability to keep working as you age.
About 68 percent of today’s workers expect to retire at age 65 or later. But the experience of actual retirees is that only 31 percent of those workers are able to hold off until then. The median retirement age is 62.*
Some of the reasons people might leave the workforce earlier than they had intended could be health problems, the need to care for a spouse or family member, or changes to companies, such as downsizing.
The bottom line is, you may not have complete control over when you retire, and you need to be ready if that day comes for you.
So, how do you get ready?
A good place to start is with pen and paper (or a budgeting app) to create a budget. Track your expenses for a couple months to truly see where your money is going.
Cook meals at home and pack your lunch instead of going out. Cancel unnecessary subscriptions. Try calling your internet and phone providers to ask for discounts or better deals.
No one said this was going to be easy. But if you take financial responsibility in your life as young as possible, you should benefit from that over time.
By Matt Andreas, CFP®, CEPA®
Financial Advisor
*Source: J.P. Morgan Asset Management “Managing Expectations of Ability to Work”, Nov. 26, 2024, based on Employee Benefit Research Institute, Greenwald Research: 2023 Retirement Confidence Survey as of Dec. 31, 2023
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