Graduates, start thinking about your final paycheck, not just the first one

• Although college graduates may be thinking about their first paychecks, it's never too early to start thinking about the last one.
• Think about investing graduation gifts and rounding up student loan payments and investing the difference.
• Use tech tools and apps that promote savings, and don't forget to take advantage of retirement savings plans at that first job.

As I sat watching my daughter’s graduation, I looked out at the sea of caps and gowns and wondered how many of these college graduates were thinking about their final paycheck. They were almost certainly thinking about their first.

But I work in retirement, so thinking about how people will pay for life in retirement is one of the great passions in my life. The reality is that we have only an educated guess for what is in store for today’s graduates when it comes time for them to retire. One thing we can say with confidence: The sooner they start to save and invest, the more prepared they will be and the greater flexibility they will have along the way.

Drew Angerer | Getty Images

Graduating students wait for the start of New York University's commencement ceremony at Yankee Stadium, May 16, 2018 in the Bronx borough of New York City.

What graduates and those just starting their first job need now are a few painless ways to get started. Share these tips with a college grad you know.

Invest your graduation gifts. When family and friends splash the cash to congratulate you on your hard work, they expect you to treat yourself or hope to help smooth out some bumps as you get started. Investing that money may help you maximize their generosity. Of course, many grads may need to meet immediate expenses. If you cannot invest all of it, find a percentage you are comfortable investing.

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Round up your student loan payments: Repaying student loans may seem like a daunting task. It may feel like paying for your past is getting in the way of building your future. But you may be able to use that habit of making your regular payment to do both. When you budget your payments, round up and invest the extra. For example, if you are paying $250 a month, budget $300 and invest the extra $50. (You may also look into refinancing your student loans and investing the savings.)

Explore technology that helps you save as you spend. A new generation of investment tools is designed to fit in with your lifestyle. For example, the Acorns app rounds up the cost of simple everyday purchases, such as the salad you just bought for lunch, and invests the difference. It’s the digital-age equivalent of sweeping up your change every night and dropping it into a jar. It may seem small, but it adds up quickly.

Take advantage of your 401(k) plan. With all your future wages ahead of you, now’s the time to form good habits and expectations around how you invest. That’s part of the value of being defaulted into your company’s 401(k). It’s like autopay for retirement saving — you don’t have to think about it. But don’t just accept the default rate. Make sure you are contributing enough to get the full company match, and understand how long you need to stay in the job to be fully vested. Opt in to auto-escalation as well so that each year — presumably when you get a raise — you can save and accrue a bit more.

Here’s the thing: Any start, no matter how small, can make a significant impact over time. And time is one thing all new grads have a lot of. So take advantage of it.

Getting started doesn’t have to be difficult. There are many low-cost options available that may be an appropriate place to begin building your balance. Because it’s true what they tell you at commencement: Your future is bright. And now is the time to start investing in it.

— By Anne F. Ackerley, managing director and head of BlackRock U.S. & Canada Defined Contribution Group