Saving for retirement may not seem like a priority when you are young. When college students graduate, they tend to be ready to conquer the world, but are they ready? Not possessing adequate financial knowledge about preparing for retirement after college can lead to a failure to invest in a secure retirement plan. Before starting a job after college, millennials should educate themselves on the barriers to retirement and ways to be financially ready to retire.

Learning from Your Retirement Planning Mistakes

Most millennials in their 30s have had adequate time to prepare and learn from the mistakes of not investing in their retirement early. Not investing early has caused some millennials in their 30s to have to catch up and recover from not investing in their 20s. Still, it will allow them to have a significant financial cushion in place at retirement age. However, 20% of younger millennials in their 20’s may not have adequate funds for retirement. Younger millennials want to chart their path in life. They may not follow the traditional method of staying in one profession throughout their lifetime and do not seem to value loyalty to a specific employer, nor do they want to commit to one career for the long term. This method of professional employment may not enable them to become “vested” into an organization’s retirement plan or increase their income level consistently due to “job hopping” and constant career changes.

See Millennials May not be Retiring Soon—But They are Already Planning for it.

Barriers to Retirement

One of the most significant barriers preventing millennials from being financially ready to retire is employers shifting from pension plans to defined contribution plans or 401(k)’s. The shift to defined contribution and 401(k) plans compels an individual to remain with a company long enough to become vested in a retirement plan. Ultimately, not contributing to a voluntary retirement plan offered by employers is like throwing money down the proverbial drain and can lead to reduced funding availability in an individual’s retirement years.

How much are you going to need for retirement?

Steps to Prepare for Retirement

To be financially ready to retire, millennials should take the following steps:

• Educate themselves on the retirement plan offered by their employer (vesting, funds, and fees).

• Invest a percentage that takes advantage of the employer contribution match.

• If you are self-employed, seek out a retirement plan contribution option.

• Evaluate their monthly income and expenses to determine where to find more cost savings to invest in retirement.

See my feature in Top 10 Things Every College Grad Should Know About Money.

Preparing for your retirement in your 20s is the best way to maximize the benefits offered by your employer. Take advantage of the offerings as soon as possible and continue to increase your contributions as your financial situation changes. It’s never too late to invest in yourself.