GoodCall Expert Panel: How to Start Saving for Retirement Now

BY GoodCall

GoodCall Expert Panel: How to Start Saving for Retirement Now

Saving for retirement is something most people know they should be doing. Whether or not they’re actually doing it? That’s another matter.

According to Capital One Investing’s 2016 Financial Freedom Survey, nine in 10 working Americans believe they should be investing for retirement – but only 75% are actually actively doing so, compared to 80% last year.retirement

What’s more? Even fewer are confident that they are investing enough to live comfortably after they retire (down eight percentage points from 2015).

There are a few factors behind this lackluster commitment to retirement savings. One is limited knowledge. Half of all investors (and 60% of millennial investors) say they lack knowledge or experience about investing, which causes them to be less confident.

Many are also prioritizing other things. Just 16% listed increasing retirement savings as their primary goal in 2016 – behind things like traveling, losing weight and buying a home. Others are struggling to pay off student loan debt and don’t have the resources to worry about retirement savings.

Saving for retirement can feel overwhelming. And retirement seem like a long way off – especially if you’re just starting your career. But when GoodCall asked a panel of personal finance, retirement and investing experts about the best time to start saving, we got one overwhelming answer: right now.

We asked each expert one question:

When is the optimal time to start saving for retirement? Should young professionals begin contributing to retirement accounts as soon as they start working – even if they can’t contribute much, and even if they are living paycheck-to-paycheck? 

Read on to find out what our experts think, and get more advice on when to start saving for retirement, how to get started, and even what not to do:

Gary Weiner

1“Young people should begin saving for retirement as soon as they begin working, especially if their employer provides a 401(k) match. That match is free money. The most important element in retirement savings is time. Every precious week, month, and year adds to the compound effect needed for a secure retirement.

Even if you are also paying down debt, are living paycheck-to-paycheck, or can’t afford to save much at first, it is still important to save something regularly as soon as possible. While it’s recommended that you save 10-15% of your income, you can start with a lower percentage and work towards increasing that amount over time.

If you feel like you can’t afford to save, take a good look at your income and how you can increase it, as well as your expenses and ways you can cut back. Between those two efforts, you should be able to carve out some regular savings towards your retirement, and it will make a huge difference down the road.”

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Andrew Meadows

2When is the optimal time to start saving for retirement?

“The most optimal time to save for retirement is as early as possible. Saving something is way better than nothing at all. Folks in their 20s have the unique advantage of time, and should take this opportunity to begin saving – with or without a 401(k). No other age group has this advantage, and it’s a powerful edge in the savings game.

Everyone’s financial situation is different, as are their career paths, student debt, and a myriad of other things that can impact surviving versus saving for the future.

For those worried about debt, remember that a workplace savings plan can help get retirement started with pre-tax contributions. As long as you’re paying your debt and able to save even the smallest amount, you’re doing your part to help yourself for the future.”

Should young professionals begin contributing to retirement accounts as soon as they start working – even if they can’t contribute much, and even if they are living paycheck-to-paycheck?

“Young professionals should absolutely start saving as soon as possible, even if they can’t contribute much. Every little bit counts for the greater good- your future. Even if it’s mid-to-late twenties, compound interest can work for you no matter now little you are able to save. Career security goes hand in hand with fiscal security as long as you’re doing your part.

If possible, find a job that offers a retirement savings vehicle and take full advantage of this. Some college graduates don’t have this benefit available right away.

Before you start participating in your retirement plan, find out how often you can change your contribution amount. This changes from plan to plan.

Some people may tend to spend more during the holidays or on summer vacation.  However, late winter and the fall may be better times to increase contributing if you’re slowing your contributions down during those high spending seasons.

Living paycheck to paycheck is a real struggle for new workers. It’s never a good idea to try to save and not leave enough to pay other bills. Be thoughtful and real about what you’re able to do.  Find that magic number of what you can afford to save, and you’ll be able to adjust your standard of living around that.”

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Joe Roseman

3“If you have income, then you should have already begun putting money away for retirement. Many of us have seen these numbers and say, ‘I will start next paycheck,’ or ‘I will start in January when I have this bill paid off.’ Stop! Wait a minute!  Start now!

So, where do you put the money once you have made the decision to begin saving?

Create a savings account. You must have an emergency fund of at least 3 months of income, and preferably 6 months of income.  Put it aside for emergency.

Enroll in your company retirement plan. It may be called a 401(k) or a 403b.  Whatever you company calls it, enroll.  Then, check to see if your employer is going to match your contributions.  If they are, put at least the amount that will allow you to receive the full amount they match.  Most of the time, the match is 2-5%. Put your contribution in so you can get the ‘free money’ that your company provides.

Look at ‘tax free’ places to put your money. One of the largest obstacles to saving for retirement is income taxes. Income taxes are also one of the largest detriments to breaking up compound interest. When we say ‘tax free,’ we mean a financial instrument where you have paid the income taxes up front, the money is allowed to grow tax-deferred, and when you access the account for retirement, there are no income taxes due. There are only 4 financial instruments that allow this type of tax treatment: Roth IRA, Roth 401(k), municipal bonds, and permanent cash value life insurance.  Look these over closely.”

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Trevor Ewen

4“The answer is always, always, always: right away. Compound interest is an incredibly powerful force. Financial advisors, wealthy people, and probably your parents understand this and have built their livelihood on it.

The sad fact is that most people get wise to this at some point in their early 40s. If you start late, years of incredibly powerful earning power has been lost. No matter how young or “paycheck to paycheck” you are, get started and build the habit. I also recommend picking up side work to get yourself towards a goal of 10% per year at the base. Your future self will thank me.”

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Kevin Gallegos

5“‘Retirement'” sounds so far off to young adults that they often see little value in saving for it. However, having the freedom to do what you want, when you want, resonates. Having options – financial freedom – is the key reason to start saving early.

You’ll have a lot more money the sooner you start saving, thanks to compounding interest. Invest $5,000 annually between the ages of 25 and 35, and you’ll have $602,070 at age 65, assuming a 7% annual return. Invest $5,000 annually between the ages of 35 and 65, and you’ll have only $540,741 at age 65. Keep a consistent pace and reap more results. Invest $5,000 annually between the ages of 25 and 65, and accumulate more than $1 million.

Use a simple budget to help make savings a habit. Budgeting may not sound exciting, but it is the number 1 way to save money. Budgeting need not be complicated. An Excel spreadsheet, or pencil and paper, will work as well as budget-specific software.

Start by setting goals, and build the budget with the goals in mind. Maybe “retirement” isn’t a goal, but ‘working part-time,’ or being able to travel X weeks a year, are goals. Then treat retirement (or ‘goal’) savings as a mandatory expense in the budget. If necessary, start with a small amount like $25 or $50 per month and increase it whenever possible.

Setup self-billing for savings. Some financial institutions let you arrange automatic withdrawal from a checking to a savings account. Check with your employer for automatic deposit into a savings account.”

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Andrew Marshall

6“The fact of the matter is, it depends on the circumstances of the individual, and they should talk with a personal financial planner to begin a plan.

There are some basics that everyone can start with that will help them get off on the right foot.  The first is spending less than you make.  It can be very hard to do when starting out after college, when you aren’t making a lot of money, you have student loans, and you want to do a lot of activities with friends.

Another must is contributing to a work retirement plan if it offers a match.  A company match is free money and should be taken advantage of.

The other important step when starting out is to research and have a plan in place for student loan repayment.  There are several options with different rules, and someone out of school should know what their strategy is for repayment.  If their loans are at an interest rate that is higher than they can get by investing, then they should pay off the student loans first.

It is important for young people to remember they are a long way from retirement and by saving and investing future pay raises, they will gain ground on their finances and someday be in a good position to retire.”

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Ilene Davis

7“You are correct that most people don’t start saving until it’s too late – at least 30% or so of Americans over age 55 have less than $25,000 saved for retirement.

The optimal time to start saving for retirement is with the first paycheck received. And that applies to anyone, not just young professionals.

There are many programs that allow someone to invest as little as $50 or $100 a month.   That’s less than $5 a day. Anyone with even a modest sense of personal responsibility can find a way to live on $5 less a day if they really want. And for those who are young, time is their greatest partner in building wealth.

Here’s something I share with clients. If they invest $1,000 a year, less than $3 a day, for 40 years, and those funds earn 6% a year, 40 years later they would have over $150,000 accumulated.

Another way to look at this is, again assuming a 6% investment return and using the rule of 72, they would be able to determine that each $1,000 invested would be worth around $2,000 in 12 years, $4,000 in 24 years, and $8,000 in 36 years.  So a person who invested $1,000 a year starting at age 25 (assuming it grew at 6% a year) would be able to start withdrawing approximately $8,000 (the actual amount is $7686) a year starting at age 62 and each year for 35 years thereafter.”

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Stephen Davis

8“As you can probably gather, the best time for optimal savings for retirement is ideally in your 20s, when you first leave school and begin earning paychecks. The sooner you begin saving, the more time you have to grow your money. Known as compounding, as you begin, your money receives its own gain each consecutive year. For example, consider if you start age 25 and put aside $3,000 a year in a tax-deferred retirement account for 10 years – and then you stop saving completely. By the time you reach 65, your $30,000 investment will have grown to more than $338,000, (assuming a 7% annual return), even though you didn’t contribute a dime beyond age 35.

Now let’s say you put off saving until you turn 35, and then save $3,000 a year for 30 years. By the time you reach 65, you will have set aside $90,000 of your own money, but it will grow to only about $303,000, assuming the same 7% annual return. That’s a major difference.”

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Gregory J. Kurinec

9“The simplest and easiest answer is you should start saving for retirement IMMEDIATELY.  We have all heard about the power of compounding interest/returns, but to truly experience this one has to have skin in the game.

I understand it is much more difficult to set aside money for retirement these days.  Millennials are graduating with student loan debt not seen by any other generation.  Not only do they have this large sum of debt, but the interest rates that go along with this debt are enough to strangle anyone, let alone a new graduate that is being paid substantially less then past generations.  With interest rates in the 6-8% range on these loans, it is hard to justify taking any excess income one might have and save it for retirement.

With a market that is in a very volatile position, where a best-case scenario may very well be a flat market, how does one justify not dumping everything they have into paying down debt?  Simple!  Because you have to do both.  It is the right thing to do.  If someone were to sit around and wait for the right time to invest, they may be waiting a long time.  There is never going to be a ‘right’ time.  The ‘right’ time is immediately.

Start off small, but start.  The more you can take advantage of 30-40 years of compounding, the better off you will be.  Take advantage of employer matches (free money).  It doesn’t even matter what account you save in, as long as you are saving something.  Worry about that later.  Once you get accustomed to saving on a regular basis, then you can decide which savings vehicle will be most appropriate for you moving forward.  But if you don’t start saving, then you won’t have a tax problem to worry about in the future.”
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Alexander Vaccarella

10“When it comes to saving for retirement, it is never too early. Starting to save early for retirement, or saving for any other goal, for that matter, obviously gives you the benefit of a longer horizon for potential investment growth. But more importantly, it gets you used to the practice of saving, and its corollary, not spending everything you make.

The folks that wake up one day realizing that they have not saved enough for retirement have to make significant compromises in their lifestyle, planned retirement ages, or both in order to fund their retirement. On the other hand, those who begin saving early do not have to make compromises to their lifestyle, as they are already accustomed to spending just a percentage of their take-home pay rather than all of it.

If a young professional just began working and is living paycheck to paycheck, they should employ the same logic. But instead of putting money away in a retirement account, they should instead be saving to build an emergency fund to cover important expenses in the event of income loss or unexpected expenses. Once they have an emergency fund sufficiently funded, they can shift their savings going forward into a retirement account. Even though the dollar amounts may seem low, many employee-directed retirement plans set contributions in percentage terms, so you will automatically save more as you begin to earn more.”

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Ben Offit

11“The optimal time to start saving for retirement is as soon as possible – whether that means in college or right out of college.  Young professionals should begin contributing when they start earning money and feel that they can put some money away and still enjoy their lives today, even if they can’t contribute much.  This is because the sooner you can develop a habit of learning to not spend every dollar and to put money away for your ‘future self,’ the earlier you are planting the seeds for tomorrow and the better you will be throughout your life at maintaining this habit.

Take, for example, the idea of working out. If you learn at a young age that exercising consistently is important and you make that a routine part of your life, chances are you will continue to exercise throughout your life, which will help you to be healthy.  Conversely, if you wait until you are age 60 to start working out, chances are, you will be in bad shape by then.  People who start saving at 21 years old and give themselves 40 or 50 years to save and grow money will be amazed at how much wealth they have accumulated, and they will be thankful that they started at a young age and carried this habit throughout their life.”

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Claudia Sawaf

12“Regardless of age, background and circumstances, the answer should always be: NOW. One recent retirement study, conducted by ebri.org in 2015, highlights that only 40% of the population show confidence in being prepared for retirement. When we work with middle-aged clients, we often hear: ‘We wish we had started earlier.’ This is indeed a true assessment due to the time value of money. The earlier we start to save for retirement, the more money can simply accumulate and compound over time.

Now, millennials have a unique challenge on their hands, and that is frequent job changes. Even with that, I would recommend taking advantage of work retirement plans and contributing, as soon as eligible. If and when the millennial leaves a job for a better opportunity, they should roll over the saved amount to an individual retirement account, which then becomes the holding account for future 401(k) rollovers. This will give them the necessary seed money for retirement.

It is also never too late to start. If you feel behind, it is crucial to maximize contributions to retirement plans and take advantage of so called catch-up contributions – the additional amount you are allowed to contribute and deduct if over the age of 50.

Of course, the above strategies are only viable if we have a solid handle on our budgets. A good place to start is to evaluate discretionary expenses and determine if those expenditures are meaningful to you. Next, we suggest to look for possible leaks, money dripping out of accounts. When was the last time you received quotes for various types of insurances? What are your fees on bank accounts?

Our last piece of advice is to hire a financial coach, to help you build a solid roadmap to keep you on track.”

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Robert R. Johnson

13“Quite simply, people should begin the discipline of saving for retirement the moment they start working.  Time is the biggest ally of the investor, and young investors can take advantage of their long time horizons to retirement.

Many young professionals believe they are living paycheck to paycheck, yet are living on a great deal more income than they did in college.  Behaviorally, many of us simply adjust our spending to meet our income level.  That is, as we make more money, our spending habits increase.  ‘Out of sight, out of mind’ is a motto that young professionals should adopt.  That is, they should have a percentage of their income deducted from their pay and deposited into a retirement account.  That way, they won’t actually miss the money because it never seemed that they had it.

Also, when a young professional receives his or her first raise, they should have the amount of the raise deducted from their paycheck and act as if the raise never happened.  That way, you can painlessly increase your retirement commitments.

To get some idea of why time is your greatest ally, consider the following. If a 25 year-old commits to invest $100 per month into a retirement account earning a 10% annual return, they will have amassed over $632,000 by age 65.  If that same person waits until age 35 to start, he or she will only have amassed $226,000 by age 65.  Time makes a huge difference.  By the way, if you think 10% is an aggressive return assumption, since 1926, a diversified portfolio of large capitalization common stocks has returned in excess of 10% compounded annually.”

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Chad Nehring

14“If you’re just starting out as an investor, the biggest obstacles often are personal, not financial. For instance, you might think you don’t make enough money to invest.

Believe it or not, you probably do. In a lot of cases, you can start a mutual fund investment for as little as $250, then a small $50 minimum every time you invest after that. The amount you save initially isn’t important. The fact that you are saving is what matters.

A caveat: If you don’t have much in the bank, don’t worry about investing just yet. Make sure you have ample emergency savings first. Start by setting small goals, perhaps building that savings to $1,000. Work your way up from there.

Once you have your emergency cash squared away, get started investing with a well-diversified choice, such as an index fund. This will give you a broad investment into many areas of the market. Just be sure to keep your time horizon and your investment goals in mind.

The next problem can be fear. For instance, your friends might tell you that stock investing is crazy. Well, compared to an insured savings account at the bank, they’re right.2

Being successful in anything involves taking some risk, and the stock market is no different. Remember, though, that most companies in the stock market are led by good, decent people trying to do the right thing.

Namely, they are trying to produce a product that they can sell for a profit at a fair price to people who want to buy it. That in turn benefits all of us as shareholders of that company.

Another potential obstacle is feeling inadequate. You might feel that it’s too easy to make a mistake. Trust me, your investor friends felt the same way when they first started. And don’t worry about making mistakes — because you will. The point, as with any mistake, is to learn from it.

If you choose to own individual stocks, start with a company that you know, one whose products you use. For example, if you can’t get through a day without a Diet Mountain Dew (like me), then get started investing through shares of Pepsi-Cola (NYSE: PEP). Coffee drinker? Starbucks (NASDAQ: SBUX) is a stock as well. (Note: These are examples, not recommendations.)

Maybe you find investing so boring you can’t even think about it. The good thing is you don’t necessarily have to! Investing in a target-date fund, for instance, will simplify things as much as possible.

If you choose a target-date fund, professional managers will make the decisions for you based on what year you feel you might retire.

The farther away that is, the more risk you’ll take on, meaning the target-date fund will own more in stocks and less in conservative investments such as bonds. Getting closer to retirement? The target-date fund will change automatically to become more conservative over time.

One easy get-started strategy: If your employer matches contributions into your retirement plan, start by putting in at least that amount from your paycheck into your 401(k) plan. Pick an amount you want withheld and it goes straight to your retirement.

The only mistake, really, is to put off investing. Some people say, ‘Well, I’ll do it later, when I’m older.’ Something you can never, ever get back is time. That’s especially important due to a concept known as the time value of money.

Simply put, the longer you stay invested, generally the larger the investment will grow. Remember when you learned about compound interest in middle-school math class? It’s the same idea.

The adage here is ‘Time in the market is better than trying to time the market.’ Start small, be consistent and focus on the long term — but get started investing.”

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Kevin Smith

15“The ideal time to begin saving for retirement is the moment one earns their very first paycheck.  The keys to building a significant retirement nest egg are time and compounding.  The longer the time until retirement, the longer the compounding period for one’s retirement monies to grow.  Both time and compounding work together to greatly increase the probability of accumulating a sizeable retirement fund.

One of the biggest mistakes potential retirees make is to procrastinate.  Although most postpone planning seriously for retirement until many valuable years have passed, there truly is no greater time than the present to begin putting money aside.  The sooner the better!  Even young professionals or those who are just beginning their careers would be wise to begin contributing to retirement accounts right away.  It doesn’t take much to make a meaningful difference.

As a general rule, it is advisable to earmark at least 10% of one’s annual income towards retirement.  Assuming an annual salary of $30,000 and a compound annual rate of return of 8%, investing a mere $3,000 per year (or $250 per month) from age 21 until age 65 would result in nearly $1.1 million by the time of retirement.  Conversely, postponing saving for retirement until age 40 would result in a retirement nest egg of only $439,000 at age 65, even if annual savings were doubled from $3,000 to $6,000 using the same 8% annualized rate of return assumption.

Want to be a millionaire?  Investing at least 10% of your income each year from the moment you receive your first paycheck can get you there quite easily with the passage of time.  The best part?  You don’t need to win a game show to do it!”

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Leslie Tayne

16“The optimal time to start saving for retirement is NOW! It is never too late to start saving and it really doesn’t matter what age you are. If you can comfortably afford to put a little money aside each month, you should be in good financial shape by time you retire.

For example, let’s say you started putting away around $50 a month when you turned 21. By the time you are 71, you will have saved $30,000 in the bank. Let’s say you contributed $50 a month between the ages of 21 and 40, and then decided to invest your savings in a small bond. You will have even more saved for your retirement.

I believe the ideal time to start saving is when you graduate college or start your first ‘real career.’ This should be a time where you are finally ‘adulting’: starting to budget, getting your finances in check and learning to be independent. This is prime time to start contributing to an emergency fund and/or retirement savings. Start out by putting a little money aside each month, and then reward yourself when you hit big financial numbers. You will be surprised to see how much you save if you start saving as early as your 20s.

I recommend that young professionals first make sure they have their debt in check and are budgeting. Now that they have come to adulthood and understand what the real world is like, it may take a little time to get situated, but this is ok. They may have student loans they need to pay off each month, but they should still consider contributing a small amount to their retirement.

Start out by opening up your account with $100, and make the commitment to contribute at least a small amount to this account each month. Consider getting organized by setting up an alert in your phone to remind you about making monthly payments. If you find yourself having a rough month where you are struggling financially, then skip the contribution to your savings and redirect your money towards paying your debt and/or bills.

If you are living a paycheck-to-paycheck lifestyle, then I recommend you re-evaluate your expenses before doing anything else. Examine your essentials vs. non-essentials. Ask yourself, do you really need that gym membership, do you need to shop for those designer clothes, and is there anything you’re willing to part with and sell for a couple of extra bucks?  Think about all of this and establish a budget plan. In doing this, you will relieve yourself from that paycheck-to-paycheck lifestyle and free up funds to contribute to a savings account each month. This will help you get yourself protected and prepared for your future.”

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Michael Darvish

17“Without any hesitation, I would say that the sooner you start the better off you are in the long run. Many clients ask me the same question about their kids and when should they start to contribute to their 401(k) plans or IRA accounts. It is better to invest something, no matter how small, than to not invest at all or wait 5-10 years before you are making more money and can contribute more.

I don’t recommend a specific amount to young adults in their early 20s. Instead, I tell them to use a percentage of their pay and raise that percentage as their salary goes up. Also, I advise young adults to contribute to a 401(k) rather than an IRA. There are two reasons for this. One, the money invested into a 401(k) comes out of their check pre-tax. This will prevent them from spending the money on something else (if it comes out of their paycheck and straight into the 401(k) plan). Two, in many cases, their employer will match up to a certain point. That’s extra money going towards their retirement, and it all adds up. It’s a very wise decision to start as early as possible, regardless of the amount you can afford to put away.”

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Dolph Janis

18“It is never too early to save for retirement.  Whether it is only $20 a week or $500 a month, it can and will add up.  Treat the money you put away like a rent payment. It HAS to be done every month. Commit to the amount, and you will be thankful later in life that you did.  Every dollar you can save now, will make it easier later.

With people living longer in life, your time frame to save becomes even more important.  Look at your budget and see where you can find some extra funds. Do you really need all that data for your phone? Do you need those extra movie channels on your TV? Or do you need that Starbucks coffee every morning?  The answer is, you probably would be fine without it.  But would you be fine without having retirement savings?

My recommendation is putting those savings away, up to $458 a month, and open a Roth IRA. It is the best supplement you can have for retirement, as it will be tax-deferred before you retire, and tax-free after you retire. You can fund up to $5,500 a year before the age of 50, and $6,500 a year after. You do not have to fund the full amount every year, but if you can, it will be to your benefit later in life.

With any other savings you have, find an advisor that can help you with accounts for your future. If the company you work for has a 401(k) program, take advantage of it.  Remember, time can catch up to you quickly. If you wait too long to do anything, don’t let it be saving for your future. Something saved is better than nothing saved.”

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Craig Gingerich

19“The best time to start saving is right away, especially if you can do it from your first paycheck. We all naturally adjust to live on what shows up in our bank account.

I sit down with the entire age spectrum when helping a new employee setup their 401(k). The people doomed to work forever have two phrases in common: ‘I’ll save more later when I make more,’ followed by 40 years later: ‘I wish I would have started in my 20s because I can’t possible save enough now.'”

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Pauline Paquin

20“The best time to start saving for retirement is today, whatever your age. If you are in your early 20s and not convinced, just have a look at a retirement calculator. Saving all through your 20s and not saving a cent again until age 65 gets you pretty much the same nest egg as if you started saving at 30 and saved for 35 years until retirement age.”

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Nicholas Vail

21“You should start investing as soon as you are able, even if it seems like a miniscule amount. Compound interest is your best friend as a young investor.

Ever heard of retirement loans?  NO.  They don’t exist.  It is important to plan for retirement as early as possible.”

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Robert D. Higgins

22“It depends on a few factors:  The cost of outstanding debt. The availability of matching contributions. Other liquid assets.

My father counseled me about the importance of capturing the 50 cent/dollar match in the 401(k), when I started my first job after business school in 1980.  I lived semi-frugally for the first several years by sharing apartments.  I managed to live beneath my means until I paid off student and car loans.  When I bought my first house, I rented a room to a tenant.  By the time I was 40, my net worth exceeded $1 million.  Yes, I had some exceptional investments, but those would not have been possible without the seed money I scratched together through frugal living.”

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Robert Palmer

23“The time is always now to start saving for retirement. So many young professionals think that they can avoid having retirements coming out of their paycheck now, and just start saving when they get a little older. That is walking a dangerously thin line.

Whether your company is offering a retirement plan option or not, young professionals need to be paying themselves first with every paycheck. Make it automatic if you have to.”

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David Walters

24“There’s a reason so many financial professionals urge young professionals to start saving for retirement as soon as they can: compound growth. Even a relatively small amount can benefit from the longest possible growth timeline. For workers who cannot realistically save the recommended 10-plus percent of their income right away, saving a little bit on a regular basis is still much better than holding off until they earn more.

For the many employees with access to a 401(k) plan, it is also smart to contribute at least enough to secure any match from their employers. A 401(k) match is essentially free money for retirement, and workers shouldn’t leave it on the table.

Young professionals should concentrate on establishing good saving habits as soon as possible. After a while, setting aside savings will become routine. With time contributions can, and should, grow. But the advantages to saving early, even in smaller amounts, mean that getting started is the most important step.”

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David Geibel

25“First, it’s important to start forming that good habit, so it becomes part of your adult financial life. The earlier you begin investing, the more likely you are to stay the course. Second, you have the power of compound interest. The earlier you begin investing the more power that money has to compound over time.

Having an emergency fund established for life uncertainties is important, and then move to savings outside the 401(k). After that, saving ten percent of you income would be a good high bar to strive for. But if someone has high interest debt, etc. they should be aggressively paying down debt primarily and putting a smaller amount into savings. If a new grad can ultimately put five to ten percent of their salary in a company 401(k), that’s a great start. Getting as much money invested as early as possible will allow that money to start working for you sooner. Starting with a company 401(k), you get the tax deferral, and most companies match to some degree. It’s also automatic – once you set it up, it’s done and you won’t notice.

If this money is for retirement, consider a Roth IRA next. Roth IRAs grow tax-free, and when you withdraw, there is no tax on the gains or interest. They are good long-term savings vehicles. Third, consider an individual taxable stock account – only if there is extra money after you contribute to your 401(k) and start a Roth IRA. You should always put at least enough into your 401(k) to get your full employer match.”

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Leonard Wright

26“You should always save for retirement, no matter how young. Be as tax-efficient as you can when saving in your 401(k) plan. In low income-earning years, save as much as you can in a Roth 401(k).

As your income rises, begin to transition an increasing portion of your savings to the traditional 401(k). If you knock the cover off of the ball, take full advantage of your 401(k).

If you are a small business owner with none to only a couple of employees, and in your 50s, and it looks like you might do exceedingly well for three, four or so years, consider a defined benefit plan where you can deduct about $200,000. This is the quickest way to catch up when you are behind.

To guide you to achieve retirement gradually, do the following steps with your 401(k) or other employer retirement plan:

  • Start out at least at 3 percent of income, but preferably 6 percent.
  • Automatically increase savings. Adjust it up by 1 or 2 percent up each year until you hit 15 percent.
  • Never cash out your 401(k) plan when you switch employers.

The statistics show that almost everyone can save 3-6 percent when the automatic enrollment and auto escalation features are added to a 401(k) plan. And yes, that means minimum wage day laborers as well as clerical staff.”

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Scott M. Sadar

27“Young professionals should start saving regularly as soon as they land their first job in their 20s, even if they are living paycheck-to-paycheck. The sooner you begin saving, the more time your money has to grow. Say, as an example, you start saving at age 25 and put aside $3,000 a year in a tax-deferred retirement account for 10 years – and then completely stop saving. When you reach 65, your $30,000 investment will have grown to more than $338,000, assuming a reasonable 7 percent annual return.

By contrast, say you put off saving until 35, and then save $3,000 annually for 30 years. You have set aside $90,000, but it will grow to only $303,000, assuming the same annual return.

How is this doable if you’re living paycheck-to-paycheck? Find ways to trim expenses. Instead of a new car, buy a good, low-maintenance, pre-owned car, such as a Honda Accord. Model years 2011 to 2013 cost only $12,000 to $15,000. Instead of renting a studio or one-bedroom apartment, rent a two-bedroom and get a paying roommate. When you’re on vacation and hear that your flight has been sold out, take up the offer to take a later flight and pocket $250 to $300. Be mindful of sales and gift card promotions at places you regularly shop.

Many people believe this is too young to start saving; that it’s a premature priority.  But in addition to the advantages of compounding, finding a way to save when young makes sense because there is never an easy time to start. When you are in your 30s, you’re likely to be married, at least contemplating children and juggling a mortgage.

When you start saving, open a tax deferred 401(k) at work and try to maximize the employer match. This also comes with a tax deduction. If you have the money, also consider funding an IRA. Sometimes this is also tax-deductible, as well as tax deferred, depending on your income.

Invest aggressively. According to Aon Corporation, young workers typically invest about 35 percent of their retirement savings in bonds. This is too little – over time, bonds return barely more than half as much as stocks, and stocks over time have always risen in value. Assuming you can ride out bear markets, consider putting 75 percent-plus of your investments in stocks in your 20s.”

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James Capolongo

28“Saving for retirement can seem like a far off goal for many Americans, but starting early and consistently contributing over time can make a big difference to the bottom line. The following tips can help you start saving for retirement now.

Does your employer match 401(k) contributions? Take full advantage.
According to a 2014 report by the American Benefits Council, nearly 80 percent of full-time workers have access to employer-sponsored retirement plans.  If your employer matches up to a certain percentage, contribute at least the minimum required to take advantage of your company’s match.  It’s free retirement money!

Make your tax refund or work bonus work for you.
If you receive an income tax refund or work bonus, consider adding some – or all – to your retirement account.  If you are contributing to an employer-matched retirement plan and receive a bonus, opt to have retirement savings deducted from your bonus check, too. You’ll receive the match, then have the opportunity to add the net funds to your plan, too.

Cut out unnecessary spending – and invest the savings.
Do you buy coffee each morning, lunch most days, or eat out for dinner multiple times per week? Figure out how much you are spending each week and replace some of those excursions with a couple of bag lunches or home-cooked meals. At the end of each month, transfer the extra savings to your retirement account.

Do some Spring cleaning.
Do you have extra items around the house, such as books you read long ago, clothes that no longer fit, or old collectables that sit in your attic? Your extra stuff could be someone else’s treasure. Explore sites like eBay and Craigslist to sell those items, then invest the extra cash. You might even enjoy the extra space you’ve created!”

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Dilini Dias-Dahanayake

29“When you are young and just starting to work, retirement is the farthest from your mind. However, as life goes on, retirement can quickly catch up to you.

Start today & start NOW! Planning early enough on your retirement is surely the best start in this journey.  Start today with smaller things. Evaluate if the purchasing choices you make today are absolute essentials or if they can go towards saving for the future. Every dollar you put down today can help you retire a day earlier. Most experts recommend starting to save by 25, but a good rule of thumb is to start saving as soon as you start collecting a steady paycheck.

Take advantage of saving options available. Once you have a regular paycheck, it is likely that your employer will offer some type of retirement savings plan. Max out your retirement accounts (401(k), 403(b), traditional IRA, and Roth IRA accounts are recommended) by making the maximum contribution you can at each stage of your career and taking full advantage of employer matching programs.  Matching programs will help you retire sooner rather than later.

Save more, spend less. It’s all about increasing your disposable income and putting it towards your retirement savings.  Make smart choices on even your smallest purchases and eliminate the unnecessary ones.  Downsize your lifestyle now so that your future is as comfortable as you want it to be, when you want it to be.  Set up automatic payments from your paycheck to your savings account, before paying your monthly living expenses. Use the Save by Cutting Back guide for ideas on how to save on almost anything.

Retirement is an inevitable occurrence in life, and being adequately prepared will give you peace of mind about your financial future.”

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Judith Ward

29-2“While young professionals likely have other financial priorities in mind, such as paying down debt, they need to make sure they are balancing those with saving for retirement.

First, they should take advantage of any ‘free money’ by contributing enough to their workplace savings plan to receive the full company match, if offered.

Second, young professionals should strive to save 15% of their income for retirement (which includes any company match from their employer).  If this seems impossible right now, they can start small and work their way to 15% with annual increases in their savings rate.

Lastly, with so much time on their side, young investors should have 90% or more of their retirement account in stocks or stock mutual funds.”

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Damon Gonzalez

29“It is crucial to get into the habit of paying yourself first by saving as early as possible.  The most common employer match that I see for 401(k) plans is 50% on the first 6%.  Where else can you make a 50% return on your money in a year?  There is almost always something people can cut in their budgets in order to save up to the match.  Not getting your employer match is the equivalent of burning money or voluntarily asking your boss for a pay cut.  Find a way to save up to the match and learn to defer your gratification; your future self will thank you.”

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Matt Carbray

28“The easiest answer is: yesterday!  Most people delay the decision because of a lack of personal budgetary restraint and overall procrastination.  What most forget is that, by not contributing to a company retirement plan, they are leaving money on the table by way of employer matching contributions.

Even a small level of savings, especially when it that is coupled with the compounding effect, can create a future nest egg that will not largely change one’s lifestyle.

As we tell our millennial and young professional clients, it all starts and ends with a budget, for if we do not know what we spend we cannot assess what we should have left to save.”

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