It is understandable that retirement is not yet on the minds of young people, especially those who are just entering the workforce. Also, it can be challenging to start saving for retirement early when a range of money matters arise. Student debts, home mortgages, starting family costs and other expenses can be a hindrance along the way. Those hindrances should not discourage them to start saving early! Instead, young adults should take advantage of the most important assets they have, which is TIME! Retirement saving is important for all ages, but being young gives them an edge to build more wealth and tailor the strongest retirement plan possible.
By having an idea of how much you would need to pay for your Medicare Supplement Plan, you would be able to set and commit to retirement saving strategies.
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To help young people jump-start their retirement saving and planning, we at FreeMedSuppQuotes reached out to retirement experts and bloggers to share their advice to their younger self.
Here are their responses to the question:
What retirement advice would you give to your 20-year-old self?
The retirement advice I’d give my 20-yr old self is to focus on what’s important in life.
Life is short so enjoying it on the path to retirement is key. That said, prioritize what’s important. Retiring early is possible, and the ultimate balance in life can be reached only in retirement.
Retirement tip: Do more international traveling when you’re younger. Click To Tweet
The most important thing you can do is save 10% of your income for your retirement, starting on the first day of your first job. You won’t miss the money, and you will make all of your spending decisions based upon 90% of your income. But everyone gives you that advice, so I’m going to offer something more unique: Do more international traveling when you’re younger. You will gain a broader world view and create lifelong memories. If you discover someplace you would rather live, it’s usually easier to immigrate as a working person than as a retiree.
Invest while you’re young. Take care of the debt, but don’t let the focus on debt distract you… Click To Tweet
Overall, I would say to start off investing with every paycheck, especially if we have student loans. Building the habit early of investing routinely is more important than the monetary benefits from this approach. Even if the interest rate is 10%+, the route to refinancing is remarkable so we can have debt at lower rates closer to 5%, or lower within a year or two. From here, investing in Vanguard’s Total Stock Market Index via a 401k (employer matches should absolutely be considered well before paying off extra on student loans – it’s free money!), an IRA, or other investment vehicle (check out HSA’s as another retirement vehicle, will result in receiving about a 2% annual dividend (historically speaking). With long term investments being touted at 6-8% returns, we would only need a ~4% return over the long-term (10+ years) to edge out ahead. If the market returns 5%+ over the long term, then we only get to benefit more.
Personally, I’ve applied this approach to benefit more than $7,000 in 2015 & 2016. The nice thing is the 2015 $7,000 has already further grown another 25%, including those 2016 and half of 2017 2% annual dividends.
Anyhow, that’s what I would say. Invest while you’re young. Take care of the debt, but don’t let the focus on debt distract you from the other half of your financial house, investing. Together they can push your net worth higher than if you focused on only one of them.
Start saving with your very first paycheck, and let compounding work for you. Click To Tweet
Don’t Wait. Start saving with your very first paycheck, and let compounding work for you.
Learn to be patient, and wait until you’ve saved enough to “pay cash” for an item you desire. This is especially true if the item is a “want” instead of a “need,” but it applies to both.
Start contributing to a retirement plan at work as soon as you are eligible. Click To Tweet
My advice is that you should start contributing to a retirement plan at work as soon as you are eligible. Even at age 20. This is even more important if there’s an employer match to the 401(k) contributions. Having those extra earlier years, spread out and compounding over your working life, geometrically grows your retirement funds.
Even if retirement seems like so far for a lot of people, starting early on, definitely gives… Click To Tweet
The best tip I’d give my twenty-year-old self would be to start saving money very early on. A lot of people have some wrong understanding of basic personal finance, and they seriously do not understand how powerful compound interest is! I so wish someone explained it to me clearly when I was younger, but there’s still time for a lot of folks out there to benefit from it. Even if retirement seems like so far for a lot of people, starting early on, definitely gives you a huge boost which would take years of catching up with missing contributions if starting late!
Keep your lifestyle simple and your expenses low. Click To Tweet
Going to college is not a MUST in today’s society. It’s important to really understand who you are and what you want to do the rest of your life. If you plan on going to college take the community college to state college route. We were both able to leave college with minimal student loans and this allowed us to get off to a great financial start in our life.
Find a good paying job and negotiate your salary from the start. This is the only time where you can literally negotiate thousands of dollars of your income. Pay off your high-interest loans as quickly as possible and invest the rest. The quicker you become debt free and start investing 15%-25% of your money the better. Time in the market is your biggest friend when it comes to investing.
Keep your lifestyle within your means. Way too many college grads spend money like they have it when they are still in thousands of dollars of debt. Keep your lifestyle simple and your expenses low.
The Savvy Couple
The miracle of compound interest (from dividend reinvestment as well as share price increases)… Click To Tweet
No one (except maybe your mother) will care about your financial future as much as you will. Not your employer, not a financial adviser or even your spouse. With that in mind, start saving now using a self-directed Roth Individual Retirement Account. Putting money in this account must be a top priority ($150 to $200) a month. Inside your Roth IRA, invest this money in a low-cost S&P 500 mutual fund where quarterly dividend earnings are automatically reinvested. Let it ride. Do not borrow from this account. The miracle of compound interest (from dividend reinvestment as well as share price increases) will guarantee a comfortable retirement for you, far better than a 401(k) savings plan that may be offered through an employer.
Don’t touch your retirement savings. Click To Tweet
If I could give the 20-year-old-me advice about planning for retirement I would say three things:
- Plan for retirement beyond just finances. Your second act is not only about money but also the quality of life you will live and how you will find meaning in the coming decades. Stay active and try new things to keep boredom at bay.
- Don’t touch your retirement savings. The real me cashed out 401k plans during numerous job switches sacrificing potential growth over multiple years.
- Don’t forget to budget for those things most important to you. Set aside enough to not only pay the bills but also enjoy the freedom you have finally achieved.
Prepare now with the right insurance, the right savings, and a plan in place way before you… Click To Tweet
My advice to myself at 20 would be two things really: Plan for the future now instead of later. The future is coming like the speed of light prepare now with the right insurance, the right savings, and a plan in place way before you need it!
Forced savings is key. Compounding interest can be your best friend later in life! Click To Tweet
Forced savings is key, I wish I could have started earlier! Whether it’s an employer sponsored 401k, Roth IRA, or just simple automatic transfers to your savings account, compounding interest can be your best friend later in life. It is far easier to save money when you never considered it to be disposable income in the first place.
Have a retirement goal in mind then commit in accomplishing it by setting milestones. Click To Tweet
Have a retirement goal in mind then commit in accomplishing it by setting milestones. Even as early during the college years, committing to set aside an amount of funds every decade of your life will assure you that you’ll have enough money to last throughout the retirement years.
In Focus: Retirement Expert’s Take on Medicare Supplements as an Important Healthcare Option during Retirement
Retirement plans are never complete without knowing about health care options. With that, we also obtained the thoughts of the retirement experts about Medicare supplements or Medigap plans as an important solution during retirement.
Let’s find out what these experts have to say about Medigap:
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For early retirees, Medical Plans could be very helpful. There is just a horrible lack of insurance options for early retirees today. Employer provides retiree health benefits are very limited if available at all. The ACA insurance exchanges could be fixed and provide better choice, but I’m all in favor of a government backed option like Medigap as well. – J.W Brooks
We both think that Medigap Plans are a great option to consider in retirement. It’s very important to have good health care as your age gets older. A Medigap Plan will ensure you can afford the healthcare you need down the road. With most things insurance related it’s important to consider value before making a decision. -The Savvy Couple
Medigap plans are an important part of any thorough retirement preparation. No one knows what unplanned health events the future may hold. My parents experienced this recently when my dad had a stroke. Initial hospital charges were huge and the bills keep coming. Thankfully their Medigap plan helped pay healthcare costs not covered by Medicare including co-payments and deductibles. – Dave Bernard
I think that to retire and be able to enjoy your life you have to know that no matter what happens you’ll have options. Medigap insurance can provide you with those options. – Rena McDaniel
Medigap Plans can be very helpful to retirees who are looking to have some healthcare costs covered which are not covered by original Medicare. These plans can also cover costs for things like medical care when you are traveling abroad. Although these plans might not be the right fit for everyone, they are definitely worth exploring! – Justin Champa
Although Medigap Plans are essential for 65 years old and above individuals, learning more on how these policies can help one in the long run will help set the perfect mindset in choosing a plan. With 10 standardized Medigap plans to choose from, and not to mention, a certain enrollment timing to best get a Medicare Supplement, it’ll help one to brush up on some details beforehand. Not only will help a person decide on which policy will best work – savings and enrollment qualification are both considered through early planning. – Leandro Mueller
The least understood piece of retirement planning is how health care costs may affect your finances and your retirement budget. At 65 seniors are required to sign up for Medicare, the federal health insurance program. But this program does not cover all expenses. Retirees must then wade through options for additional coverage either through a Medigap/supplemental private insurance program or a Medicare Advantage program, also offered through private insurers. Buying this additional coverage is critical. The experts say that if you face chronic ongoing health problems, Medigap coverage may be better because while monthly costs are higher, you typically have lower out-of-pocket costs for services.
However, Medigap plans DO NOT include prescription drugs. You also must purchase a stand-alone Part D plan to cover drug costs. If drug costs are an issue then a Medicare Advantage plan may be a better choice because these plans DO COVER prescription drug costs. Make sure you know what that level of coverage will be.
To sort this all out, hire a fee-for-service insurance consultant who can help you sort through the pros and cons of Medigap vs. Medicare Advantage with your unique health issues in mind. Warning: Going forward with Medicare-only may mean financial disaster in retirement.
Meanwhile, none of these programs cover long-term care services in an assisted living or nursing home facility. Only if you are completely broke will Medicaid, a federal program for low-income people, kick-in to pay those costs. When it comes to health care costs in retirement, it helps to be either poor or rich. Plan ahead.
– Julia Anderson
Hope our young people were able to pick up a thing or two in this post and was inspired to start saving and planning their future the earliest time possible.