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Today I’ll be touching on the very important, and the inescapable thing we will all face, retirement. In your 20s, retirement is not exactly what you’re mostly thinking about, but thinking about it early will most definitely save you time and energy down the road.

According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts, and 39 percent have none whatsoever. Using your money for necessities are unavoidable, but saving even a small amount every paycheck is super beneficial, especially if you plan on having the same lifestyle that you currently live in retirement.

By participating in your companies 401k plan, we can assure we are making strides towards our goals. Pensions are long a thing of the past and we must do everything possible to set ourselves up for the future. If you’re not participating in your company’s 401k plan, you’re essentially missing out on an easy way to save and gain free money. First off, the money is taken out of your paycheck before tax, this is money you would have normally received but taxes would have been taken into account and you would have received less of it. Letting your money grow pretax allows it to grow at a faster rate because more money is allotted to the potential growth. Also, most companies have a matching program…free money, where they will match a certain percentage of the money you contribute. Pretax money on top of interest on top of a matching program from your company is a WIN WIN WIN!

The Retirement Plan

While the number you should save depends always on different people and situations, a popular formula was created by Kimmie Greene which offers a flexible outlook describing how much an individual should save from their 20s until their 60s.

In your 20s: The goal is to save a quarter of your overall gross pay, this includes your 401k and any other investment you may have made like a Roth IRA, stocks, real estate, businesses, etc

By age 30: Have as much as one years salary in your savings. For example, if you are making $60,000 a year, try to have $60,000 in savings by your 30th birthday.

By age 35: Twice your annual salary in savings.

By age 40: Three times your annual salary in savings.

By age 45: Four times your annual salary in savings.

By age 50: Five times your annual salary in savings.

By age 55: Six times your annual salary in savings.

By age 60: Seven times your annual salary in savings.

By age 65: Eight times your annual salary in savings.

While this may sound impossible, the power of compounding interest and having your money work for you can make this very much a reality. This strategy is also similar to that of Fidelity Investments which advises it’s customers to have ten time times your annual salary in savings by the time you reach retirement.