4 Tips for Saving for Retirement at Your First Job

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Getty ImagesDeveloping a budget early in your career can help you take charge of your financial future.
By Jamie Ohl

As you start your first job, retirement can seem very far away. You may have 30 or more years in the working world ahead of you, but if you are financially able, now is the time to start saving. Establishing good financial habits now will benefit you throughout your career and into your retirement.

There's a lot for young savers to be optimistic about. According to a recent MOOD of America survey commissioned on behalf of Lincoln Financial Group, 78 percent of millennials say they feel in control of their financial future, and 85 percent say planning for their financial future is empowering. However, 79 percent say understanding their options for retirement planning can be overwhelming.

One of the most important things you can do is to start saving now. By committing to saving from the very beginning of your career, you can take advantage of the power of compounding interest -- which ultimately amounts to earning interest, on interest.

Saving is personal, and every person has different financial pressures, whether it's student loan debt, car payments or rent and living expenses. But developing a budget and starting to save now can help you take charge of your financial future.

Here are some key tips to keep in mind as you kick off your career and your retirement savings.

See the big picture. It's easy to spend every dollar you earn at first, without putting any money away. The good news is that, according to the MOOD survey, 83 percent of millennials report saving some money from every paycheck, even if it isn't a lot. As you save, look at your overall financial picture and create a budget that includes not only your immediate needs like rent, living expenses and student loans, but also short-term and retirement savings. Taking a holistic view will help you create a realistic budget and savings plan that you can stick to.

Leverage retirement savings plans. You may have the opportunity to enroll in your employer's 401(k) or 403(b) retirement savings plan. They may also match a portion of the savings that you put into the plan, as an incentive for you to save. If you don't take full advantage of the match, you are turning down free money. If you are able, try to contribute at least up to the amount that the company will match. By utilizing your employer-sponsored plan, you are also reducing your taxable income, so you'll owe less on April 15. If your company doesn't offer an employer-sponsored retirement plan, consider putting your savings into an individual retirement account.

Seek education and expert advice. Your employer may work with a retirement provider that offers financial education, through one-on-one meetings with a retirement consultant, or have educational materials available online or in print. These tools can help you understand your investment options. Some plans offer automatic enrollment, deferral and contribution increases, as a way to enhance retirement outcomes for savers.

A financial professional can help you understand the different investment options available to you, and help you understand any fees that may be associated with the offerings. Consider scheduling an initial meeting with a financial adviser to get you started. Then try to commit to at least one annual checkup to assess the health of your savings and make sure you're on the right track. The MOOD survey shows that 71 percent of millennials feel empowered when they talk to a financial professional about planning for the future.

Think of your future first. When a big expense comes up, whether it's a down payment on a house, a new car or something else, it's tempting to borrow from your retirement savings, withdraw funds or stop saving altogether. By borrowing from your plan you could incur taxes and penalties related to not paying the loan back, and also lose out on market gains. At times like these, stay focused on your long-term goals and put your future first. Starting to save early is one of the best things you can do to improve your retirement readiness. Steady savings can help you feel confident that you can live the life you envision, through your career and into retirement.

Results for the 2015 MOOD (Measuring Optimism, Outlook and Direction) of America poll are based on a national survey conducted by Whitman Insight Strategies on behalf of Lincoln Financial Group from March 31 to April 9, 2015 among 2,273 adults 18 years and older across the United States. The sample was weighted to reflect the proportion of adults 18 years of age or older by gender, age, region, race and Hispanic ethnicity based on data from the U.S. Census Bureau. The margin of error is plus or minus 1.9 percent at the 95 percent confidence interval for the entire sample.

Jamie Ohl is president of Retirement Plan Services for Lincoln Financial Group. She is responsible for the overall strategy, growth and profitability of Lincoln's Retirement Plans Services business, which is committed to partnering with intermediaries and plan sponsors to provide solutions, services and education to help plan participants retire successfully.
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