You have finally graduated with a college degree and are at last embarking on the great journey of professional life. Maybe you are a doctor or a lawyer. Maybe you work a dead-end retail job.
Maybe you don’t even have a job.
Just about the only guarantee is that it’s hard. You are struggling under thousands of dollars of student debt, and you wonder how you’re ever going to make it.
You are definitely not alone. There are some harrowing statistics out there. One in three Americans has literally nothing saved for retirement. And as if the retirement crisis weren’t enough, we are also on the verge of an automation crisis.
Many jobs are already automated, and the Economist reports that around half of all jobs may very well be automated within two short decades. No government is ready to face this.
That means it is all up to you! What can you do to make sure that you have enough money to retire?
The very first step in any retirement plan is to make sure you know where your money is going right now. If you do not know that, you are not really in control of your finances.
You may think you know, but most people are surprised when they start tallying up their receipts every month and making comparisons with their income.
Once you do start keeping a careful budget, you will have a much better idea where you can start cutting expenses. If you are already living with only the very basics, there may not be much you can do.
If you scale down your housing or your power usage or your cable plan, you may very well be able to start saving more money every month.
If you are very lucky, you may have an employer who offers employer-sponsored retirement plans. With these plans, the employer will typically match your contribution and assume the risk of the investment.
There are many different types of employer-sponsored plans: 401ks, pensions, and stock options to name a few.
Whichever type you choose, make sure you understand the terms and conditions governing it. For example, a lot of people make the mistake of contributing to an employer-sponsored plan and then changing jobs before they are vested.
If you do this, you lose all the employer contributions.
What if you are an entrepreneur or freelancer? There are still some forms of retirement plans you can contribute to—though obviously you will be making all the contributions yourself. Unfortunately you must assume all the financial risk as well.
Some examples of retirement plans you can contribute to as a freelancer include a Roth IRA, traditional IRA, or Keogh Plan. Make sure you do your homework before you choose a plan; each type has benefits and drawbacks.
As you might guess reading the above, it is pretty tough trying to manage your finances without any guidance. If you had a lot of money, you could work one-on-one with a personal financial advisor. Most people today (especially Millennials) simply cannot afford to do this.
Thankfully there are now software programs that can provide you with a lot of the same personalized advice. You can sign up with a robo-advisor and upload information about your financial situation. The program will in turn provide you with advice on budgeting and investments. This can help you to work toward your individual goals.
How do you pick the right robo-advisor?
There are numerous choices out there right now. Make a list of your goals and priorities, and then start reading robo-advisor reviews. To get you started, two of the most popular robo-advisors right now are Wealthfront and Betterment.
Saving for retirement is an extremely challenging task in today’s world—but it is still possible. Work hard and be smart with how you spend and invest your money. With luck on our side, you may still be able to enjoy a comfortable retirement!