4 retirement resolutions for younger workers just starting their careers 

The new year is a great time for younger workers to set themselves up for future financial security — even those who are still decades away from retirement. In fact, the sooner they start, the better.

Now’s the perfect time for even entry-level workers just starting out in their careers to develop new rituals to save for retirement, as well as any other long-term goals. And sticking to these habits early and often can amass a small fortune, even upwards of a million or more dollars. 

Take, for example, a 25-year-old worker in a new job earning a $50,000 salary. If she contributed $400 a month (or 10% of her salary) into a retirement account, then she could have more than $1.1 million saved by age 67 (her Full Retirement Age, according to the Social Security Administration), assuming a 6% rate of return and consistent contributions. And even if that same person could only contribute half that amount, or $200 a month, then she’d still have more than half a million put away for the future by 67, assuming the same factors. 

Changing any of the factors will affect the outcome, of course, which is to be expected in the decades leading up to retirement. Oftentimes, savers may find they have to adjust what they contribute — some years saving more, other years less. Market volatility will affect the performance of a portfolio from year to year, as well. 

Still, there are a few strategies young Americans can employ to prepare themselves for a more comfortable retirement. Here are a few tasks to try in 2024 to set yourself up for success: 

Meet the employer match 

Financial advisers typically suggest saving somewhere between 10%-15% of a worker’s salary for long-term goals, such as retirement, but that isn’t always feasible. If it’s not, then start where you can. For employees of companies that offer a retirement account with an employer match, aim to contribute at least up to the match amount to take advantage of that extra money. If that’s not possible, then make meeting that match a short-term goal. Contribute however much you can, to start, and prioritize increasing the contribution to meet the match as soon as you can (and then going beyond that eventually). 

One strategy with financial and non-financial goals alike is to use SMART goals, which stand for specific, measurable, achievable, relevant and time-bound goals. Using this approach may make meeting goals, like increasing retirement plan contributions, feel more attainable. 

Automate your savings 

Workers can automate their savings in their 401(k) plan through payroll deduction, but savers can also use the same tactic outside of the employer-sponsored retirement account. Try setting up automatic contributions to various savings accounts, or investment accounts like an IRA, through your bank. Many financial institutions work together for automatic transfers, as well, if your checking, savings or investment accounts are housed at different firms. 

For many retirement plans, workers can also set up automatic increases in their contributions. They can pick one time of the year to do that, such as on their work anniversary, a birthday, a holiday or when they typically expect to get an annual raise.  

Understand your asset allocation 

The new year is a good time to review retirement accounts’ asset allocation, which is how the portfolio is invested. Many young workers are advised to invest aggressively, since they have decades for their money to grow and rebound from market downturns. Regardless of the strategy that workers choose, it is important to regularly check retirement plans (such as once every six months, or quarterly, perhaps) to see that their portfolio is still invested accordingly, or if it has shifted because of market movement. 

Open a Roth account 

Roth accounts are invested with after-tax dollars, as opposed to traditional IRAs or 401(k) plans, which use pre-tax contributions. Roth accounts can be powerful tools for members of younger generations who are likely in low tax brackets. If they expect to be in higher tax brackets in the future, the Roth account basically provides a discount on taxes — investors pay the taxes on the contributions up front, and then can withdraw the money later with no tax bill. 

Roth accounts have specific distribution rules. For example, investors must have had the account open for five years and be 59 ½ years old to avoid paying any taxes or penalties on their withdrawals. But the principal (which is what investors contributed) — not the earnings — are always available for distribution tax- and penalty-free. There are exceptions, such as an allowance of up to $10,000 from a Roth IRA for a first-time home purchase, where investors may be subject to taxes but not penalty. 

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