5 Helpful Tips to Start a Retirement Savings You Must Know in Your 20s

How can I start saving for my retirement?

1. Establish your goals
2. Build a habit of saving
3. Turn to investing to meet your goals
4. Automate your savings
5. Dedicate a percentage of your extra funds to savings

As a 20-year-old something, retirement could look like it is far off in the future. Most young adults think that retirement planning is something you can save up for later. Besides, young adults might think that they have just entered the corporate world and are ready to advance their career, in fact, why think of the distant future? But adults near retirement age will tell you that years slip by and 40 years into it is not something you must take for granted.

In this article, we revealed five of the most important steps you can take to help you get motivated in saving up for retirement.

Establish your goals

For every savings guide, the first on the list will always be that of establishing goals. This goes to show how having a plan should give you direction and motivation. Without a plan, you are left with a habit of just saving up what you can and whenever you can. By making sure your plans are laid out, with a timetable, tracker, and list of goals, you will discover whether you need to adjust the amount you save or save more frequently to attain your goals.

There are plenty of templates you can find online to feed your creativity and get you motivated. Find one that you can print out or save on your mobile phone. Some templates even have spaces for you to write down your challenges in saving up for retirement which can help you point out which needs improvement.

Build a habit of saving

Retirement savings are often thought of as something that can be done later, especially as it seems like a saving concept for the distant future. This notion, however, prevents people from saving the most money they can for their retirement. More so, they are left with little time to think about their retirement savings plan.

At age 20, retirement is not a common factor to prioritize, and many do not realize that saving money when they are closer to their goal prevents them from compounding to maximize wealth.

Saving for retirement takes plenty of years, much longer if you have bigger goals. It is best to save little by little as early as you can. While experts say almost 10% of income should go to retirement planning, it all depends on your financial goals and how you envision yourself to be once retirement day comes.

Turn to investing to meet your goals

While the common practice for retirement savings is to put it into a savings account, your money does not have to sit still that way. There are plenty of investment opportunities that will increase the value of your assets. On a more technical level, your money saved in a savings account will not incur enough interest to be able to battle inflation. Thus, reducing the purchasing power of your money in the future.

Automate your savings

Automating savings is a technique you can use if it is difficult for you to allot a percentage of your income for retirement. Through automation, you can forget about putting money into your retirement plan and focus on other things that require your immediate attention.

The act of automating your savings is a form of paying yourself first. Though you are unable to acquire joy, for now, the joy of knowing you have a secure future is incomparable.

Dedicate a percentage of your extra funds to savings

Any extra funds you have are a good addition to the amount you have saved for retirement. It can be an extra change, reimbursement, or any unexpected amount coming in. You’d be surprised at how much extra funds could help you reach your goals. Again, if it is possible to automate, then do so. This way, you can forget about it and prevent yourself from spending it.

Build up your retirement savings today – little savings, but done early, goes a long way!

Tips are made to provide you with guidance but making sure that you are on the right track is in your own hands. Your goals are your own, and tailor-fitting your retirement savings plan to how you envision yourself in the future should help you make better financial decisions today and change bad habits. Whether you just started working or are in your prime years, knowing that you are set and established for the future is an empowering feeling.