Most of us will carry on working well into our 60’s. Which when you are 20 seems a world away. At the start of your adult life, when you are just starting along a career path, or when you are still unsure of what you want to do it can be hard to think about retirement so far into the future.
But, the world has changed. In previous generations, people may have retired in their early 60’s, but many of them were old. They might have been working since their early teens, struggling with their health for a long time and eagerly awaiting the chance to rest in retirement. The average life expectancy was much lower, and many of these retirees could only expect up to 10 years to enjoy their retirement.
The state of the economy and our personal finances has also changed. Those that retired in their early 60’s might have bought a house before they turned 25. Giving them plenty of chance to pay off their mortgages and start saving for retirement.
Now, we’re expected to live much longer. As our own knowledge and the health system improves, we lead much healthier lives for a lot longer. Upon retirement, we could easily live for another 20 years, some even 30 and more. But, we’ve got less money. Most of us are in debt, the average age of a first-time buyer is in some areas over 40, and the cost of living is rising at a rate much higher than the average worker’s wage. If you get a mortgage in your 40’s, you could finally be paying it off as you approach retirement, leaving very little time to save. That’s if you manage to buy property at all. Nowadays many people fall into the lifelong renters bracket.
So, while retirement may seem like a lifetime away in your 20’s, it’s never too early to start thinking about saving. So that you can enjoy 20 years of good health, freedom and fun when you finish that last shift at work. Here is a look at some of the things that you can do today to secure a comfortable retirement as well as an estate to leave behind.
One of the biggest financial issues that we have later in life is debt. When you’ve got a huge mortgage hanging over your head, credit card bills, car finance loans, consolidation loans, store cards and private loans to pay off every month, how are you meant to put any aside to save for retirement?
At that point, all you can do is make the right decisions to pay off your debts as soon as you can. You certainly don’t want to find yourself in the position of still having things to pay off when you finish that last day at work. But, in your 20’s you have a different option. You can choose to avoid debts altogether. Well, as much as possible. Change your mindset, right now.
We live in a society of credit. If we can’t afford something, we take out finance, or we put it on a card. We can’t wait. We’re impatient, and we have no sense of real money. With the possible exception of a house, if you haven’t got the money to pay for something in the bank right now, you can’t afford it.
Instead, wait. Save a little each week and buy things when you can afford them. Don’t use credit, avoid debts, and you’ll save yourself a fortune in interest.
This is another way in which the world has changed. The average age of first-time buyers is rising all of the time as house prices get higher and banks tighten their lending criteria. Where once people could comfortably pay off their mortgage before their children left home, now people are entering their retirement still worrying about paying for their home. Some even retire never having owned property. Imagine having to spend a large portion of your pension or retirement savings on housing? It doesn’t leave much for fun.
So, make this your priority. It might mean living with parents for longer or living in cheap rental accommodation and saving as much as you can, but it’s still perfectly possible to buy a home in your 20’s if you really want to.
Get What You are Owed
Yes, we live in a credit society. But, we also live in a pride-fueled society. People aren’t claiming the money that they are owed because they are too proud to admit that they need it. This can leave people struggling with debt or unable to start saving, unnecessarily.
Don’t make this mistake. You may be entitled to claim with a personal injury attorney if you’ve ever had an accident or PPI if you’ve ever had a loan. You could be able to claim benefits if you are on a low income. You may be entitled to tax back or a student loan rebate. Look into it all and make any claims you can. It’s worth it.
Find a High-Interest Account
When it comes to high-interest savings, things change all of the time. Interest rates go up and down, and banks are always offering new customers special rates and deals to entice them. So, it’s important to remember that a high-interest account today won’t always be the best arrangement. Open an account and start making regular small deposits. Then, once a year or so, check the deals on offer and move your money to where it will make you the most. Just think, if you deposit $10 a week for 40 years, that’s over $20000 even without interest.
Start Collecting a 401(k) Match
Fewer companies now offer a large pension at retirement. In part, this is because fewer employees stay with the same company for their whole working careers. Instead, many offer a 401(k) match. This isn’t compulsory for employers, but if it’s on offer, you should use it. The plan states that if an employee saves over 6% of their gross wage, they forgo the match, and if they save less than 6% it’s matched. Try to save the full 6% when you can to make the most of the pension saving scheme.