Much has been made of how well the Millennials are — or are not — saving for retirement. A recent analysis dispels three myths that discourage their preparations for those golden years.
In “3 Myths Busted To Help Millennials To Save For Retirement,” an article appearing in Forbes, Kimberly Hamilton cites a December 2018 report that sounded warning bells about Millennials and their saving habits. While there are explanations, she writes that there also are several misconceptions to which Millennials subscribe that impede their saving more for retirement — and suggests ways to counter those mindsets.
It’s ok to wait to save — retirement is decades away. Hamilton argues that even if retirement seems to be a long way off, Millennials still cannot afford to wait to start saving. “The truth is, even a five- to ten-year difference in waiting to invest for retirement can cost you tens of thousands of dollars in the long run,” she writes. Further, Hamilton suggests that young professionals consider retirement benefits when they negotiate job offers.
Changing employers means losing the money put into a retirement account. There are Millennials who assume that if they change jobs, they will not be able to take the funds they set aside for their retirement through their first employer’s plan with them. Hamilton notes that while vesting schedules vary, and could affect young professionals’ saving and even full participation in an employer’s retirement plan, still it is likely that when changing jobs, they could leave their money in the plan they had established, or roll it over into an account in their new employer’s plan or into an IRA.
There are no retirement account options for someone who is self-employed. “There is a rumor going around that retirement plans, or tax-advantaged investment accounts, are only for those employed full time at a company,” Hamilton writes. “But what if that employer is you?” she asks, then answers her own question, pointing out that there are several flavors of IRA — such as Roths, SEPs and SIMPLEs — of which they can avail themselves. She adds that even though Millennials may have “plenty of financial considerations ” if they start business or are lone entrepreneurs, they should include how they and any employees they may have will save for retirement among their priorities.