Helping a College Graduate Prepare for Retirement is the Best Gift You Can Give Them

Recent college graduates are met with severe economic headwinds in the form of rising rent, escalating student debt, and general inflation. The advice that young people should “save early and save often” is given so often that it may seem hard to follow. Despite this, it is essential to emphasize the benefits of doing so for those who can secretly save some money.

Regret is often cited as one of the most convincing reasons. That is, by other people. According to a poll by Magnify Money, over 70% of members of Generation Z and 77% of millennials said they wish they had started investing earlier.

The median amount in retirement accounts for people with all income levels is around $15,000. The tidal wave of national sorrow should not come as a surprise, given that 90% of wage workers across all age groups are not on pace to retire comfortably. It is when it is too late that one realizes the strength of compound interest, which is the most powerful law in the whole economic world.

Consider the following: According to the research conducted by the consulting firm Aon, by the age of 35, you should have saved twice as much for retirement as your yearly wage, and by the age of 45, four times as much, seven times as much, and 11 times as much by the age of 67. This indicates that a person who is 45 years old and earns $100,000 per year ought to have $400,000 in retirement savings. In comparison, a person who is 67 years old and makes the same amount needs $1.1 million in retirement savings to supplement their Social Security benefits and maintain the same standard of living until death.

The most basic calculations tell us that beginning to save at a younger age will involve the fewest sacrifices on our part. Because you have a head start, the early portion of that $1.1 million comes from investment profits rather than your earnings. The sooner you start saving, the more work will be done for you by the financial markets.

A 25-year-old individual who earns an average salary must set aside 16% of their annual income to have the appropriate amount in their retirement account when they are 67. When this individual is 35 years old, they will need to set aside 25% of take-home income; if they are 50 years old, they will need to set aside 50% of their earnings.

The average beginning wage for a recent college graduate is around $55,000. However, if Social Security, taxes, and healthcare costs are included, take-home income is closer to $40,000, equivalent to $3,300 per month. If you make more than $55,000 per year, saving $800 for retirement (about 16% of your monthly earnings) plus $250 for a condo (if you’re attempting to cobble together a down payment of roughly $40,000 in 10 years) on top of that is practically impossible.

However, if the new graduate’s company pays $400 of the goal of $800 to a 401(k)-type plan, and the worker’s contribution of $400 comes before tax, then the new graduate’s net take-home pay would be $300 less while they are still saving $800 a month for retirement.

Unfortunately, most employees under 40 do not participate in a retirement plan. It is quite evident that we need a national retirement system and a solution to the spiraling expenses of higher education.

Even though retirement seems so very far away, there are a few things that a young graduate may do to assist in preparing for it in the interim. These items can help prepare for retirement. First, whether you are a recent college graduate’s parent, relative, or friend, remember that a monetary present is always appreciated. Still, a session with a reputable financial consultant can be an even better gift for them.

Here is how to locate an advisor that you can trust. Significant life events, such as high school graduation, a wedding, or the birth of a child, may serve as a springboard for daydreaming about the future. If the preparation is successful, it will cost a lot less than coping with regret at age 50 and being on the verge of poverty when you are 67.

For graduates, the best way to prevent regret in the future is to start keeping track of the money spent on fleeting pleasures right now. Instead, try the slow-building process of saving $100 per month in an emergency fund in case of unexpected expenses. To fulfill the criteria for the personal finance merit badge for the Boy Scouts, you will need to keep track of your spending for three months and create short-, medium-, and long-term objectives.

Typically, regret is caused by the advertising’s primary source of revenue, which is your impulses. Even if it often precedes the second human need, which is to live a life free from regret in old age, I do not criticize the human impulse to strive for social position and comfort with automobiles, clothing, and homes. However, you should be aware of consumption urges and how they seldom lead to a state of satisfaction. Employing self-psychology to save as much as you can as early as possible serves you well until we have a better system for retirement savings.

Contact Information:
Email: [email protected]
Phone: 3604642979

Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.