The best time to start preparing for retirement is when you enter the working world full time, usually in your early 20s. That doesn’t mean you should obsess over something that’s decades in the future. But it does mean you should put a financial plan in motion. Unfortunately, many Americans have fallen behind in this respect.
Only 19% of U.S. adults report having a retirement strategy, according to a new study from New York Life. That aligns with the general financial habits of the 2,200 adults surveyed. Here are some other findings:
- Only 26% of adults report having an overall financial strategy in place and feeling confident in it.
- Of those surveyed, 37% have no financial strategy.
- A total of 35% said they have a strategy but need help with it.
Even though the majority of respondents have no retirement or financial strategy in place, nearly two-thirds (64%) said they were confident in their ability to meet their financial goals. Of course, confidence does not necessarily guarantee success. However, having a plan can likely help with that.
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Here are five ways to get started on a retirement strategy if you haven’t done so yet.
Also see 14 retirement rules you need to know now.
Establish a Goal
Setting a retirement savings target is one of the best ways to keep yourself focused and on track.
Merrill Edge recommends using a personal retirement calculator to help determine when you might be able to retire and how much you’ll need to save up to do so.
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Set Up a Retirement Account
If you haven’t done so already, you should set up a retirement account such as a 401(k) or IRA and start contributing to it immediately. The earlier you start funding an account, the more you’ll be able to take advantage of employer contributions and compounding.
No matter what kind of account your choose, automate your savings so you don’t have to think about it. According to CBS News, automated saving allows for compounded growth, removes the temptation to overspend and ensures your meet your savings goals.
Cut Your Spending
This starts with reviewing your budget and finding areas where you can cut back. According to Debt.org, a few places you can look to cut expenses are unused subscriptions and dining out, among others.
When you find expenses that can be lowered, put the savings into your retirement fund.
Put Any Extra Money Toward Retirement
As Merrill Edge noted, when you find yourself with a sudden windfall of extra money, make an effort to put at least part of it toward retirement. This might come in the form of a raise, bonus, inheritance or some other sudden influx of cash.
Hire a Financial Advisor
If you have the funds to do so, hiring a professional financial advisor can go a long way toward helping you put together a successful retirement strategy.
“Americans are faced with ongoing change and uncertainty, which can make planning challenging,” Jessica Ruggles, corporate vice president of financial wellness at New York Life, said in a press release. “Our data has shown people who work with financial professionals tend to feel more secure and are more likely to have a financial strategy in place, inclusive of retirement savings and debt management.”
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This article originally appeared on GOBankingRates.com: Fewer Than a Fifth of US Adults Have a Retirement Strategy — 5 Ways To Get Started
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