Why Millennials Need to Change their Perception of Retirement And How to Financially Prepare For It
We noticed how most millennials today aren’t too keen on talking about retirement.
Their perception of retirement is that it’s boring, outdated, and still far away at this point in their lives. They think of retirement as the phase where you enter old age, having a frail and weak body that forces you to stop working. These ideas do not excite millennials since they want to stay young, wild, and free to chase their goals as they dream of living a fulfilling life.
That’s why they tend to spend their money in doing the things they want like traveling, eating out, shopping like there’s no tomorrow to sate their desires. But according to financial advisors, there’s a way for millennials to do all the things they want while achieving financial freedom and having to work until they reach 65 or beyond. How? By changing their perception of retirement and having a solid financial plan.
The New Road
- Most millennials were taught to live our lives the old way:
- Going to School
- Landing a job with great benefits and getting promoted after working a couple of years.
- Contribute and save for your pension.
- Keep working until you hit 65 and then you can do all the things you desire.
Not only they think that this is a boring routine in life, but most millennials feel trapped with the idea of sticking to a stable job for 30 years or more even if it doesn’t make them happy, all for the sake of living a comfortable life. But the good news is you don’t have to follow this old road.
You can start building for your retirement as young and as early as 21, 22 years old and you can retire at the age of 40. Here’s how you can do it.
Contribute in Other Employee Investment Options.
While it’s good to continue contributing in your pensions, the financial advisors claim the pension you’ll get by the time you retire isn’t enough to support your life. Instead of solely relying on your pension, invest in different employee investment accounts like the 401(k), 403(B), and Thrift Savings Plans (TSPs).
These will help you increase your money’s worth in the long run without having to work for 30+ years. Aside from these retirement accounts, you can also look for companies that offer stock options or company equity. In this way, you’re not only working hard to increase your income but you also grow your net worth as your company grows.
Increase Your Income
Want to invest and save for your retirement funds but don’t have the source of income to fund it? No worries. The financial advisors say you can’t just rely on one job if you want to be financially free. You need to venture out and explore multiple streams of income.
Whether you’re taking a sideline job, a business, or a commission work, these extra sources of income serve as your lifeline in case your main job fails. You also won’t be forced to continue working on your main job to pursue your passion and hobby since you have something to fall back on and it won’t disrupt your income flow.
Don’t Just Save, Invest.
While saving your money is a good habit to keep your money, the financial advisors say it isn’t enough to just keep it in the bank. As much as possible, you want your money to grow to its maximum potential. One way of doing that is through investing.
You can invest in the stock market or through mutual funds and buy shares and equities in thriving companies like Apple, Facebook, etc.
The earlier you invest, the more time you have to let your money grow and watch these companies as they go through ups and downs. Moreover, you can take advantage of the power of compound interest over time compared to those who started investing late.
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