It’s never too early to think about retirement
Congratulations to the 40 Under 40 class of 2018! You are leaders in our community with a bright future ahead of you. As a member of the 40 Under 40 class of 2011, I can say with confidence and from experience that the next decade of your lives will fly by. It will be busy with community, family and work obligations that will be fun, exciting, stressful and rewarding. Though this recognition is due to your dedication to the community and others, it also is important to take care of yourself and plan for the future.
Earlier this year, CNBC reported on a study that found 67 percent of Americans expect to outlive their retirement savings. And recent studies show that only 45 percent of Americans invest in the stock market. Perhaps even more alarming, 69 percent of millennials are not even saving for retirement. However, the same survey shows that nearly half of millennials would be challenged to cover current bills if their next paycheck was withheld, so it’s not hard to understand why so few are investing in their own long-term financial success.
When I read data points like the ones above, I am reminded why young leaders need to take their future savings seriously. Though retirement feels a long way off, it is critical to begin saving early in your professional life. Starting early can feel daunting, especially with the pressure of everyday bills, but there is comfort in knowing you are preparing a long-term strategy. And there are some easy steps you can take as a young professional to get started.
First, the simple act of saving money can set you up for a better financial future. Beyond that, young professionals should take advantage of investment opportunities provided by their employer. Many companies, nonprofits and municipal organizations provide matching investments to a 401(k) retirement fund, meaning the employer will invest a percentage of your earnings into your retirement account in addition to the amount you contribute. Surprisingly, many young people are not aware of this benefit or fail to take advantage of it. In some ways, it is like leaving part of your salary on the ground for someone else to find. According to the Financial Industry Regulatory Authority, one in four employees does not take advantage of the employer match. This results in an estimated $24 billion in company matches going unused every year.
These are just a couple of common-sense ideas to get the ball rolling. To truly maximize your retirement and wealth management planning, you should seek the help of a trusted financial counselor. While your family and friends may have some good suggestions for you, it is important for you to find a financial planner who is right for you; someone who will help you make decisions throughout your career to ensure you reach your financial goals. The best move you can make right now is to establish a strong relationship with an adviser who will help guide you through the many changes you will face in life.
As a member of the 40 Under 40 club, you now have a larger network of professional colleagues and have demonstrated the leadership skills needed to succeed. Remember to use some of those skills to ensure success not just for the people in your professional life, but also for yourself and your family.
Tracey Hornbeck is president and CEO of Legacy Trust in Grand Rapids.