Twenty-somethings need to begin their retirement planning as soon as possible.
Retirement planning should start as early as possible in order to ensure you have the biggest nest egg possible. Even people in their twenties who are unsure about what they want out of their jobs in the long term should be setting the foundation for retirement. There are a number of things that they can and should do when it comes to retirement planning. Here are a few of the most important things for people in their twenties:
1. Live within or below their means. Retirement planning is hard when people are racking up debt and living beyond their means. Twenty-somethings are also likely paying off student loans and need to be thrifty. There are many ways in which people can live within or below their means, including the avoidance of credit cards, learning how to cook, eating in versus eating out, budgeting, waiting to buy brand-new gadgets and shopping at secondhand stores.
2. Look at the big, long-term picture when it comes to money and investment. This means twenty-somethings need to start setting money aside as soon as possible for retirement. This usually entails participating in their employers? retirement plans. If employers match money up to a certain percentage, twenty-somethings should take full advantage of that if possible. If nothing else, they should set aside at least $50 a month for a retirement plan.
3. Renting is fine for the time being. Make no mistake, purchasing a house is a big commitment that requires a hefty sum. Buying is usually a wise investment, yes, but not if enough money for a 20 percent down payment is saved. If a twenty-something has only 3 percent of a down payment on a $350,000 mortgage, she is throwing away about $10,000 a year on interest. Renting is usually cheaper (remember property taxes, maintenance and other assorted expenses that homeownership brings). Twenty-somethings who rent are able to save money while building up funds for down payments.