It's that time of year: open enrollment season. That's when your employer sends you loads of information on benefits like your retirement plan for next year. As a millennial, preparing for retirement now may seem premature, since you've still got another 30-plus years in the workforce.
But start saving smartly now, and you could be a millionaire before you retire.
Fidelity studied the savings habits of more than 1,000 clients who earned less than $150,000 and had at least $1 million in their 401(k)s to see what worked for them. Here are some lessons they shared that can help you hit the $1 million milestone, no matter how much you're earning now.
Start small, aim big. You've got years until you retire, so you may be tempted to put off contributing to a retirement plan. But time is actually your biggest advantage if you're in your 20s or 30s. "Time is either going to work for you or against you. So get it working for you," said certified financial planner David Mendels of Creative Financial Concepts in New York City.
That means contributing to your 401(k), or other employer-sponsored retirement plan, if you have access to one. Or opening and contributing to an Individual Retirement Account (or IRA), if you don't.
Even if you can't max out your contributions — the limit for 2015 is $18,000 for 401(k)s and $5,500 for IRAs if you're under 50 — be sure to contribute at least enough to take advantage of any employer match. "A dollar more is more than a dollar less," said Mendels. And you can often arrange with your employer to have your contributions auto-increase annually as your salary (hopefully) grows.