Consistently setting aside money and then monitoring it to see that it is earning the best possible returns is your best bet for being financially secure when the front porch swing beckons., according to financial planners.
In fact, the Wells Fargo Institutional Retirement and Trust, which tracks trends, has reported that a growing number of workers aged 18 to 39 are participating in employer-sponsored programs aimed at retirement. The percentage taking advantage of their company 401(k) opportunities has risen from 43.9 percent three years ago to 50.4 percent, the trust reported.
Part of that increase can be related to a rise in the use of automatic enrollment in such plans in recent years. However, although the number of participants is increasing, the rate of average deferrals has dipped slightly, from 5.2 percent three years ago to 5.1 percent now. Some employers automatically enroll their workers initially at low deferral rates, such as 3 percent.
Merrill Lynch analysts say that savings trends are encouraging. In the first half of 2014, the number of first-time contributors rose 37 percent. In the so-called millennial generation, the figure went up to 55 percent. That age group makes up 20 percent more of the total working force then it did in mid-2013, the analyst said.
Some forward-thinking people just entering the workforce are making retirement part of their thinking. College students are increasingly asking for advice before they being their careers. Today’s “beginners” are more savvy about financial matters and more apt to be aware of how much they must save now to enjoy retirement later. They are willing to sacrifice a little over the term of their working lives for the sake of a worry-free retirement. Those who are familiar with the data assure younger workers that they don’t have to give up all of life’s pleasures for the sake of retirement security. There is room for both careful, consistent savings and the occasional splurge, they say.
Some younger workers are taking more careful note of how their parents are faring as they leave the job market. They are listening to the nagging concerns that Social Security may not be able to cover all the Americans who will be eligible in the upcoming years.
Consulting with a financial planner at the outset of a career is a smart move. In general, the advice is to invest in safe, tax-deferred plans such as 401(k)s or investment portfolios heavy on stocks.
Including retirement issues in your financial planning may have an effect on your lifestyle, the experts say. Some young people are not including home ownership in their plans. Frugal living through the work years may mean a comfortable future, with more gold in the golden years.