Unfortunately, millennials are not thinking about retirement at this age and it is a fatal mistake. One of the main things we should always realize and remember is 401(k)’s were never designed to be the full solution for retirement income. 401(k)’s were designed to supplement defined benefit plan, not replace them. As a result, it is imperative that folks learn what their magic retirement number is and design a plan to achieve it. For instance, my number is around $2.6MM. This includes a mortgage of a greater amount than I pay now, funds for travel, and money for medical care and other such cost outlays. Try this free retirement calculator offered by the Financial Industry Regulatory Authority at http://apps.finra.org/calcs/1/retirement.
It is important to understand what your target number is and how you can achieve it. If you have an employer sponsored retirement account like a 401(k), select a target date fund that coincides roughly with when you intend to retire, or allow an investing professional to guide you through your investment options within your fund. If you do not have a sponsored 401(k) or similar plan available, open and IRA with any brokerage (e.g., eTrade, Merrill Edge, TD Ameritrade, etc.) and make sure you set up automatic contributions on your pay days. This automatic payment ensures that you contribute every two weeks and you don’t miss the money from your check. Do not trust yourself to make the contributions manually, particularly in crisis situations. You should also pay attention to the return on investment that you are receiving on your account. I personally calculate my target assuming 8% portfolio growth and 2.5% inflation. Play around with the numbers to see what works for you.
If you have not started investing for retirement, please start! Even giving $25 per check to start is a good way to start a habit. No matter how broke you are, there is always someone else in a worse condition turning their circumstance into something better than your own. Walk by faith into something new.