E*TRADE Financial Corporation announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors. Results show how investors under 30 feel about, and plan for, retirement.
- They believe they will retire relatively young. Three out of four (76%) plan to retire by the age of 64. And nearly nine out of ten (85%) are confident they are saving enough to enjoy the retirement they want.
- It’s a primary focus of their savings. For almost half (45%), retirement is the top priority for long-term saving—even more so than saving for a big purchase or home.
- And it shows in their salary contributions. Nearly nine out of ten (86%) allocate more than 5 percent of their salary to a retirement account.
- But housing costs and student loans get in the way. Roughly two-thirds feel that housing costs (69%), student loans (66%), and other educational expenses (63%) are barriers to saving for retirement.
- They’re dipping in early. Slightly more than half (54%) have already dipped into their retirement accounts. Of those who’ve made an early withdrawal from their retirement account, nearly three quarters (74%) later regret doing so.
“It is great to see young investors focused on their retirement goals and beginning to save early, as the power of compounding returns is significant for this group,” commented Mike Loewengart, VP of Investment Strategy at E*TRADE Financial. “Developing good saving and investing habits earlier in life will only benefit their long-term investing plans.”
Loewengart offered a few steps young investors may consider to help reach their retirement savings goals:
- Follow a savings code. The biggest factor to pursuing retirement goals—hands down—is being disciplined about contributions. Younger investors should consider increasing their contribution as their salary grows as it’s much harder to scale back income after getting used to a bigger paycheck.
- Work the match. If your employer offers a contribution match to your company pension, this is as close to free money as one will ever come by in the investing world. It is probably the easiest way to seriously kick start long-term investing.
- Mix it up. Asset location—the idea of strategically deploying investments across taxable and nontaxable accounts—can go a long way towards ensuring your portfolios are optimized for long-term tax efficiency.
- Keep your eyes on the prize. Building and maintaining a well-diversified, risk-appropriate portfolio for the long term is one of the best ways to stay on track to achieving retirement goals. Try to avoid emotional investing pitfalls—like timing the market—by focusing on the long term and sticking to your plan.
This is actually good advice for any age. Any other savings tips that you have? Let me know in the comments.
Source information: http://www.businesswire.com/news/home/20170627005669/en/