While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future. While you are young and single, enjoying your freedom from family obligations and spending on trips, movies, and parties, don’t forget to save for your own future self. Of course, you have a life to live and concert tickets to buy but then again life is too short and you need to strike a perfect balance between splurging on sojourns and saving for a financially secure future.
If you don’t want to be among the 56% Americans who have less than $10,000 when they retire, put these 4 things on your retirement savings checklist now:
- Ditch Your Financial Follies for Good 46% of the U.S. adults fail to cover unexpected medical costs as low as $400 with cash, even if they have a self-directed IRA or 401(k). A recent report published by the ERBI revealed that single persons are twice as likely to have less than $10,000 in total retirement savings as compared to married workers who can lean on the income of a spouse. If you don’t want to wake up 25 years from now and realize that you lost some really big opportunities, then ditch debt and unfriend overspending right away. Loans, credit cards, and consumer debt can wreak havoc on retirement planning for singles so make retirement savings a habit and build your wealth.
- Double Your Money with the Magic of Compounding Interest As a young single, you have time on your side to enjoy the magic of compounding growth. The sooner you start, the more you can save and take advantage of compound interest to enjoy the retirement of your dreams. Let’s say you graduated debt-free and your first job is making you $50,000 a year. At this stage, if you spend your money on a car, exotic vacations, and expensive gadgets and start your retirement savings with $2,000 a year around your 30s, by retirement you would have around $593,000 in 35 years. This is great but if you would have started investing the same amount of $2,000 at the age of 24, you would end up with more than $1 million in your retirement savings.
- Build a Safety Net and Invest for the Long-Term Singles persons do not have the earnings of a spouse to lean on so they have less discretionary income to put towards their retirement accounts. Making retirement savings a habit will keep you covered during adversities like loss of a job or accidental injury. Start with an emergency fund for crisis and keep 9-12 months’ worth of your living expenses in a short-term fund that is easily accessible. Invest at least 15% of your income, contribute to your employer’s 401(k) plan and control impulsive purchases. Finally, build a safety net by making provisions for both long-term care insurance and disability. Investing from the beginning will ensure that you have enough money to retire especially if you are flying solo.
- Enjoy the Benefits of Buying a Home Just because you do not intend to marry and start a family any sooner does not mean you rule out buying a home for yourself. While owning a house comes with a baggage of liabilities (mortgage payments and maintenance) it also gives you total control over your living space while taking you out of the circle of steadily rising rents.
If you can’t establish your own retirement savings plan, you can hire a financial advisor to help you spend, save, and invest as you stay focused on building a financially secure future.