The age range for millennials changes depending on who you ask; but, if you’re in your twenties or thirties, these tips are a great way to build a base for your retirement. The basic advice, though, is the same for every generation: save as much as you can, as early as you can.
If you’re only 23 and retirement feels like a lifetime away, it’s still not too early to start saving. Because of compound interest, money you start investing now will have a greater impact than money you invest in your forties or fifties. It makes things more difficult, since early in life is when it’s hardest to save money, but that’s unfortunately how it works. Even if you can only save 5–8% of your income, it’s still much better than nothing.
Keep separate accounts for emergency savings and retirement savings—you don’t want to borrow from your 70-year-old future self to pay off unexpected bills. During your twenties, try to keep 3–6 months of expenses put away in case of an emergency. While in your thirties, start to increase your emergency savings to about 6–12 months’ worth of expenses.
Open a 401k
If your company offers a 401k plan and you aren’t already enrolled, start now.
Contribute at least as much money as your employer is willing to match, which will likely be around 7%. If your employer doesn’t offer a 401k, start looking into a Roth IRA or other retirement alternatives.
Make Your Own Investments
You don’t need to put all of your investment money into a 401k—you can also start investing in the stock market or bonds. Index funds are another great way to get started. It might seem intimidating at first, but an app like Stash can help you start investing slowly and learn as you go. A financial advisor can show you the best investments depending on when you want to retire, and a one-time consultation might not be as expensive as you think.
Pay Off Your Debt
It’s harder to save for the future when you’re still managing debt. Pay off your highest interest loans and debts first—these will probably be credit card bills or personal loans. Make double or triple the minimum payment if you can. Then move on to your lower interest accounts.
It will take a lot of diligent work, but once your debts are paid off, you can start using a credit card for necessities like phone bills and groceries. Then just pay off the balance in full every month. This allows you to take advantage of cash back or travel perks that credit cards offer—without paying steep interest rates.
Remember, these are big goals. It may take you years, or even a decade, to accomplish all of them, so don’t feel like you’re behind if you aren’t ready to tackle everything at once. As long as you’re saving some of your paycheck today, your 70-year-old future self will thank you.