There’s good news, and bad news when it comes to the ways millennials are preparing for retirement. According to David Giertz, most millennials are already starting some form of financial preparation by the time they turn 22. However, the bad news is that most of them are misinformed about how to best use that money to save for retirement.
Here, David Giertz will outline six ways that millennials could plan more effectively, and make a bigger difference with the money that they set aside for retirement.
- Always evaluate your financial health
This is super important, because you need to make sure you’re both saving enough, but also that you’re taking care of the important things. That means debt. Pay off debt as fast as possible. Speed is the name of the game when it comes to saving for retirement.
David Giertz will tell you that you need to start saving nice and early. But what’s more, you also need to pay off debts as quickly as possible. That includes your college debt, as well as cars, your home, loans, credit cards, etc. Get that debt paid and move on immediately.
- Compound interest is your best friend
Taking advantage of compound interest is one of the smartest things that you can do. A Roth IRA is a great idea for two reasons according to financial advisor David Giertz. Number 1, your money is taxed before you make any deposits, and can be accessed tax free once you retire. So it’s already paid for, unlike a 401(k). Number 2, if you start early, you can build more and more compound interest as you keep adding money throughout your life. By the time you’re done, you’ll be amazed by how much money is sitting in your account.
- Come up with a side gig
One of the best ways to earn money to save for retirement, or even to set aside for when you retire, is having a side hobby or business that benefits you financially. David says you should think about what you like to do, and how that can translate to financial success. An Etsy store might not replace your day job, but it’s something you can do in your leisure that will make you money you can save, and that you can carry on into retirement.