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Retirement Planning 101 for Millennials

If you are one of the 83.1 million people born between 1982 and 2000, your generation is known as millennials. Like every generation before you and upcoming generations, you will have to deal with financial planning, particularly when it comes to retirement.

Saving for Retirement: The Challenges

Blog Retirement Planning 101 for MillennialsFor many years, those who worked a full-time job could count on their company to offer them a pension at retirement. This changed years ago and now, we are offered 401(k) plans and other retirement plans that we have to contribute to ourselves. Because of this, it is becoming vitally important that we use investment vehicles other than our savings account to prepare for our golden years. Not only does this require some advance planning, it also means developing money management skills which many of us do not have and few of us learn in school.

Savings Accounts Do Not Go Far Enough

While you may consider the funds you are depositing into your savings account as your nest egg and your first step to having retirement funds, in most cases, you will find this to be insufficient. Your financial planning approach will have to be well-rounded to ensure you are getting the most out of your savings. There are some simple ways to approach retirement planning including:

  • Budgeting first. Everyone should have a budget for their household and as part of your budgeting plan, you should be paying yourself first. Carving out a specific dollar amount on a monthly basis to set aside for retirement will pay off in the long run.
  • Being aware of matching funds. If your company is offering employees a 401(k) or pension plan where they will match what you deposit up to a certain limit, deposit the maximum to take advantage of “free” money. By doing this regularly, you will accumulate money that will be reserved for retirement. Remember, even when your plan offers a loan program, only use it for emergencies, if at all. Make sure you know ahead of time when the funds that are matched are fully-vested as this may make a difference when you are changing jobs.
  • Finding the right IRA. For some millennials, a traditional IRA account will work well; for others, a ROTH IRA will be more effective. Make sure you keep up on the annual maximum donation limits and do everything possible to max that donation out on an annual basis. Keep in mind, your IRA accounts could offer you additional tax deductions or tax-free income later.

Too often, we wait too long to start saving for retirement. Rather than waiting until you are in your 40's and are growing more concerned about having the funds you need to keep you comfortable in your golden years, consider contacting Oklahoma Central Credit Union today by phone at 918-664-6000, select option 8, or visit a branch today and discuss your retirement plan options with a representative.

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