Congratulations Graduates…..Now About Your Retirement Plan…..

While you may have just started your post-college life you also started your pre-retirement years. So what’s your plan?

May and June are the months for graduations as high schools send off a new class of college freshmen to replace the outgoing class of 2018 into the real world. The real world of finding a job, learning that what you have accomplished up until now means little and if you are not living at home with mom and dad a little longer, that your rent is due each month.

Also your utilities and other necessities of life before you even start thinking about how you will afford happy hour. So now is the perfect time to start thinking about your retirement!

What? You’re only 23, you have only started working and you are not certain what the next 6-12 months will bring now that there is no spring break, end of semester and long summer before the next semester. And your point is?

Ask anyone who has been in the workforce more than 10 years during one of the worst economic downturns in the last 50 years and they will tell you some hard truths. First is going to be save for a rainy day because when it rains it pours. Second is going to be that planning your retirement now will ensure that when that happy time comes you will be able to do so with a clear mind.

Consider these statistics…

• Only 46% of non-retired Americans believe they will reach their retirement goals.
• 20% of non-retired Americans believe they will fall far short of their retirement goals.
• 5% who started saving when they first entered the job force and continued to save feel they have succeeded in setting aside enough money to retire.

Think about those numbers for a moment. Do you want to be part of the 5% or the 20%? The answer should be relatively simple. Now for some calming thoughts. If you understand that it is never too early to plan for your retirement and you really want to make a good start of it, there are some simple steps you can take to lay the groundwork.

1. Develop a cash flow analysis – for those who did not study finance and economics, an easier way to say this is to develop a budget that allows you to cover your necessary expenses while leaving you cash to save towards your retirement while still rewarding yourself occasionally for your efforts.
2. Continue to perform the analysis – creating a budget is not a ‘one and done’ proposition. Situations change and you have to be able to roll with the punches so that you continue to save while maintaining the financial footing necessary to live.
3. Be honest with yourself – One of the biggest traps new graduates fall into is that they have to have it all….NOW! It is nice to want to drive a BMW but perhaps it is better to buy a pre-owned Honda at first. And while that duplex in just the right neighborhood is amazing, if you can stay a few years with your parents or another relative at a more reasonable rent you will be better off.
4. Don’t leave money on the table – when you qualify for the 401k plan with your employer find out if they offer a matching contribution (most companies do). If there is, take it and as much as you can. If your 401k plan allows you to invest 5% of your pre-tax income and your employer will match up to 2.5% invest 5% because you are not only getting 50% more via the matching contribution but you are getting it tax free as well as saving taxes on the money you are saving.
5. It’s all about the finish line – you are young and the world is big and bright and waiting for you to take over. But as you are taking over the clock is ticking and you are getting older and as you move closer to retirement you want to know that you are ready for it. So always budget, invest and spend with an eye to your retirement.

Shapiro Financial Planning Group can not only help you get your child off to college but also help them get off on the right foot after graduation. We can help them to understand what is needed to retire and how to reach those goals. Call us for a consultation.