Effective tips that can help Millennials retire faster

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October 28 2020
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Millennials have changed the cultural and societal landscapes of the world. This is unsurprising, given the fact that they are the best educated and most diverse generation in history.

Effective tips that can help Millennials retire faster

With the youngest of the Millennials entering the workforce, they are also looking to change the definition of retirement.

One of the main goals of most Millenials (people who were born between 1981 and 1996) is to retire early. A recent study by T. Rowe survey showed that 43 percent of Millenials are looking to retire before the age of 65, with most saying that they want to be financially secure at an average of 58.2 years old.

This seems like a dream, especially with the odds stacked against this generation. However, an early retirement can be achievable by following a solid retirement plan along with the following tips.

Start saving money as soon as possible

A major reason why most people don’t reach their target retirement savings is because they start saving too late in life.

Starting to save at an early age can have a significant impact on the eventual size of an individual’s retirement savings. Compound interest will be bigger after 30 or 40 years compared with only 10 years of saving.

The rate of the retirement income savers can expect will depend on several factors, including the amount of money saved, the interest rate, and the length of time over the money will be withdrawn.

Set daily, weekly, monthly and annual saving goals to boost your retirement savings. You can seek help from financial advisers or use retirement calculators to see how much you will need to save to retire based on your current status and your progression. This will help you become more aware of the changes you might need to do to attain financial independence upon retirement.

Lessen your expenses

It is easy to cut back on trivial spending, such as buying a coffee every morning or eating out on Friday nights. But most savings will come from where you spend money the most. This involves cutting back on your living expenses, particularly housing, transportation and food.

Experts also advise using a cash-only system to save money and lessen expenses. This means doing away with credit cards as it can trigger a cycle of paying off debt which can hurt any efforts to save for retirement.

Learn to invest

Most people think that investing is risky, but not investing is actually riskier if you want to retire early. It is not enough for you to only save your money in your savings account and to cut back on your expenses. The value of the money sitting in a savings account will be eroded by rising inflation over time.

Put stagnant money to work. Create an investing strategy with a diversified portfolio. Invest in stocks, index funds, bonds, real estate or any asset that has good returns. Have a short-term and long-term investing strategy.

Learning about the financial markets can be intimidating at first. But your knowledge will increase if you take the time and effort to educate yourself. Stay up to date on financial news and seek a financial adviser’s help if you can.

Diversify and boost your income sources

After optimising your expenses, the next thing to do is boost your income. The bigger income you have, the more money you can save and invest.

Back in the day, the most accepted path to earning your retirement is to work a full-time job until you retire and then live off a lifetime pension. Most Australian Millennials rely on their superannuation funds to help them become financially independent after retirement.

But now, there are more strategies and ways to increase your income stream. One effective strategy is to turn your side hustle into a retirement tool. Your side hustle can be turned into a nest egg. Individuals with artistic streaks such as photographers, actors and animators are now monetising their works as a way to earn extra money. Meanwhile, some people turn to side hustles that do not require a special skill or talent. You can make money through delivery app jobs, being an Uber or Lyft driver or selling your stuff online.

One advantage of side hustles is that the majority of them only require you to work part-time. You can still work a full nine-to-five job, and it is up to you when you will work.

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