As a young adult I know, it just sucks to think about retirement. Especially in your 20s.
If pension planning is the farthest thing from your mind right now, you’re not alone. A study showed that almost 80% of Gen Ys are not actively planning for retirement, earning them the nickname Generation Procrastination. That’s a bit harsh, don’t you think?
But a slap on the hand might be due. That same study found that many Baby Boomers hadn’t saved nearly enough for retirement and wished that they had started saving earlier.
While retirement seems like a long way away, one of the wisest things you could do to guarantee a better retirement is to start planning now. The reason to start early is simple:
Returns on your investments accumulate and over long periods of time.
Yeah, kinda like a rolling snowball that grows and grows into a huge wad of cash that will take care of your elderly, wrinkly butt down the road.
Read on for a few tips on pension planning for the average twenty something.
As a carefree twenty something, you are the most vulnerable to making unwise financial decisions that will impact your future. That crisp loan application feels so light in the hand of a twenty something, but this little document might just have financial implications for you for the next twenty years.
Ask yourself: do I need credit?
Before you take out credit and always make a repayment plan that you can stick to.
One of the wisest things you can do as a twenty something is to minimize your debts. Getting through your university years relatively debt free is a goal you should set yourself, as there is a cruel temptation to live for the moment as a twenty something. These decisions can be very costly to you in the future though, so as a twenty something, you should work as much as you can and put a little aside for your future.
Sometimes minimizing debts means avoiding disaster, so if you have a financial emergency like a leaky pipe and payday is a week away, you should always consider whether the commonly demonized payday loan is your best option, or if an alternative source of funding is suitable for your needs like that provided by everline.com for example.
Save, save, save
As a twenty something, you might just think that saving is something you should only do when you get a ‘proper’ job, and settle down with kids. That is an attitude that is likely to lead to financial strain as the years pass though. Opening savings accounts from a young age will help you focus on things you will need when you get older. You could open a savings account for your children before you have them, or you could even open a savings account for your first car. Savings will grow and grow and you can watch these investments mature as you grow older. The best place to put savings as a twenty something is in a tax free ISA. You will have flexible access to a Cash ISA and this is a plus for you in those years when you might just need a bit more financial flexibility to make things work.
Look after your health
Decisions you make as a youngster can spell disaster later in life. If you take up smoking as a teenager, you should try to break the habit as early as possible. Health economists has suggested that the most damage done as a result of smoking occurs after the age of 35, so if you stop smoking before 35, you stand the best chance of living a long, financially productive life.