If you raised your hand, you are not alone. In a recent survey it was noted that when millennials (born after 1978 to about 2000) were offered a 401(k) retirement plan in their workplace, there was 71% participation, and you contributed a median of 8% of your salary. Congratulations! As a group, you started saving around the age of 22, more than a decade earlier than your Baby Boomer parents and five years before your Gen X cousins. 
It’s clear, you get the “retirement thing” – investing early and contributing appropriately. Here’s how it breaks down. If a 25-year old saves $100 a month for 40 years, for example, she will have roughly $152,600 at age 65, assuming 5% annual returns. Compare that to a Gen Xer who begins saving at 35 years old - she would have to contribute almost twice that amount each month to achieve the same savings result. 
So, are you heading in the right direction? Here are some retirement savings tips directed toward millennials.
Tip 1: Pay yourself first.
- Start contributing to your 401(k) (or an IRA if your employer doesn’t offer a 401(k)). Put in at least what your employer will match. The more you contribute in the early stages, the better off you will be down the road.
- Have an emergency no-risk savings fund like a money market or a traditional savings account that is separate from your 401(k). Keep a balance of three to six months of living expenses. If unexpected things happen, you have a rainy day fund which will prevent you from taking out of your retirement account early.
Tip 2: Live within your means.
- Create a budget to plan all of your savings and expenses to ensure you are not spending more than you make. After saving for your retirement, adding to the emergency fund and paying off possible student loans, the remainder is what you have left to live on. Budgeting prevents you from making financial mistakes early in life such as incurring unnecessary debt like credit cards, payday loans and exotic toys.
Tip 3: Invest wisely.
- Time is on your side! Create a long-term investment strategy. At this age you should, as a general rule of thumb, be investing as aggressively as you are comfortable with for the possibility of higher returns.
- Consider pooled investments such as mutual funds and ETFs over individual stocks to reduce portfolio risk with instant diversification.
- Diversify investments globally. We all love the good ol’ USA, but by considering both international and domestic investments across the various asset classes, you can create a more diverse allocation.
Starting early in your life to form good financial habits is important. When you set a budget, live within your means, contribute early and invest wisely, your dream retirement is attainable.
A flexible 401(k) plan like PAi’s CoPilot offers many of the tools that make it easier for you and your employees, no matter where you are in life, to understand and work toward your retirement goals. With CoPilot, you’ll be matched with investments that fit your needs. Your investments will be monitored for performance and you'll receive real-time messaging whenever an event occurs that may impact the health of your retirement. This means you can remain focused on running your business, not managing a retirement plan.
Contact us online or give us a call to get your plan started: 800.236.7400.
Ryne Lambert, MBA - Financial Services Representative Team Lead - firstname.lastname@example.org - 800-236-7400 x3491
Ryne is a subject matter expert on 401(k), retirement savings, investments, participant advice, personal finance education and behavioral finance.