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When saving for retirement, each generation has challenges and advantages. Challenges young adults face are student loan debt, lower-income levels, childcare expenses, homeownership expenses, and a lack of financial knowledge. These factors can decrease the funds available to set aside for retirement. These expenses are also current and need to be paid immediately, which leads to retirement savings being less of a priority. Generation X are mid-life individuals who are nearing retirement in a few short years. To eliminate income inequity in retirement, it's essential to start planning now.
How Millennials Can Plan for Retirement
Younger adults should focus on increasing their financial knowledge to secure their financial future. It’s common for younger adults to graduate college, gain employment, and not understand the benefits offered by their employers. Inquiring about the retirement plan options, evaluating plan documents, and the risks and benefits of the funds within the plan should be a top priority. Understanding these factors can help make sure that you are educated on the benefits available to you. Finally, taking advantage of the employer matching options at the beginning of your career can help you build a secure retirement. The matching contributions in retirement plans are free money and beneficial to growing a retirement fund.
See my feature in Top 10 Things Every College Grad Should Know About Money.
How Generation X Can Plan for Retirement
Individuals in their 40s are nearing the age of retirement in a few short years. During this time, you should attempt to boost your retirement savings. You can accomplish this by maximizing the retirement contributions offered by your employer. If you receive an annual pay increase, adding another percentage to your contributions could be used to make sure you build a financially secure retirement. The most significant factor is to take advantage of the employer’s matching contributions. If your employer matches the first six percent of retirement contributions, take advantage of the free money offered to you.
Saving For Retirement: Tips to eliminate retirement income inequity
Eliminating Your Mortgage for Retirement
Individuals in their 40s should focus on debt elimination. Most people in their 40s have children who are no longer in daycare and tend to have steady income increases. If either of these is the case, you can start focusing on reducing or eliminating their mortgage payment.
Here are some tips to make this happen:
Evaluate your monthly income and expenses.
Determine where a surplus can be applied to the principal of your mortgage.
Pay an extra dollar amount to the principal of your mortgage.
These steps will allow you to cut your monthly interest payment and knock years off a 30-year mortgage.
See my feature in Money Advice for Your 40s in Accredited Debt Relief.