Millennials may be sweating about finding their first job after college or how to pay off their student loans, but are these young adults giving retirement a great deal of thought yet?
According to a 2016 Wells Fargo study of millennials (defined as ages 22 to 35), about 41 percent of this age group hasn't started to save for retirement. And when it comes to the goal of having $1 million by the time they retire, millennials are somewhat pessimistic. Nearly two-thirds think they'll never reach that mark, according to Wells Fargo's study.
In fact, while it requires commitment, accumulating $1 million is a reasonable goal for many millennials, according to Ellie Ciraldo, an Edward Jones financial adviser in Roswell.
She offered the following tips for millennials who want to retire with $1 million:
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Reduce and eliminate debt
"I think for millennials – as for anyone that's in the working world – the first thing is to get rid of debt," she said.
If you'll have to take out student loans to attend college, consider starting at a two-year college. That way, you can accumulate credits for basic courses at a cheaper cost and then transfer to a four-year university, she said.
Take full advantage of 401(k) matches
Some employers automatically sign workers up for a 401(k) plan, but left to their own devices, many millennials don't participate. Just 30 percent of younger workers voluntarily enroll in their employers' retirement plans.
"What I tell millennials is that if your job is matching you three percent, make sure you're taking full advantage of that match," Ciraldo said.
Diversify your investments
Ciraldo advised millennials to pick their retirement funds very carefully.
"Most good returns come from good diversification," she said.
Millennials, she pointed out, have 30 to 40 years before they retire, so they can be more aggressive in their investments. She finds that many people tend to be too conservative.
Be consistent
Although it can be tempting to cut back on your 401(k) contributions or cash out if you change jobs, consistency will help millennials reach $1 million by retirement.
If, on the other hand, they take money out for reasons such as buying a home, they can run into trouble, Ciraldo said.
In addition, some millennials may receive an inheritance of some sort when their parents pass away.
"Hopefully some of the millennials will have a transfer of wealth similar to the baby boomers," she said.
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