NEW YORK (MainStreet) A big reason why people avoid saving for retirement is that the challenge just seems to daunting: they aren't sure even where to begin, and they have no idea what they should be doing.
To gain insight into the proper steps, we sat down with Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation, dedicated to helping young people gain financial literacy, and Justin Sinnott, a financial consultant who has been with Schwab for over 13 years.
Why You Need to Save for Retirement
The recent designated "Retirement Week" isn't enough, according to the experts.
"It really needs to be National Retirement Month," says Schwab-Pomerantz. "It's a callout in time for people to focus and maybe come back and re-examine their retirement plans, or start one if they haven't yet."
She further explains that today, the onus of coming up with your retirement income is all on you. "Employers just don't provide you with that nest egg anymore," she said.
Rather than retirement, a word that often alienates younger people, Sinnott prefers the term "financial independence." The sooner you start saving for that, the easier it's going to be. "You have to put away less in your 20s than you do in your 40s," he explains. He estimates the bill for a 30-year retirement in the neighborhood of $2.5 million, with an eye toward the increased longevity of human beings.
Retirement Planning In Your 20s
One thing is clear: The sooner you start planning for retirement the better. When you start in your 20s, you only have to put aside 10 to 15% of your net income (Sinnott is adamant that people pay attention to net, not gross) for a comfortable retirement.