Retirement should be a time of relaxation, rest and enjoyment. Gen Z, those born between 1997 and 2012, has one of the most optimistic outlooks when it comes to retirement.
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A recent Goldman Sachs Retirement Survey and Insights report showed that Gen Z feels they’re on track or even ahead in terms of retirement savings. Here are some statistics to note:
- The median retirement savings for a Gen Zer is about $29,000.
- Over 40% of Gen Zers expect to retire before age 60.
- Three in four Gen Zers are planning to retire with less than 70% of their working income.
- Over 60% of Gen Zers expect to fund less than half of their retirement savings from personal savings vs. Social Security or pensions.
Despite a positive outlook on retirement, Gen Z has some serious planning to do to retire comfortably — or early. If you’re a Gen Zer looking to retire with $1 million by age 40, here are some tips to help you reach that goal without sacrificing too much fun along the way.
Start Saving for Retirement as Early and Aggressively as Possible
Retiring with $1 million by age 40 is certainly an aggressive goal. If you’re determined to make it happen, it’s critical to start saving for retirement as early, often and aggressively as you can.
As a general rule of thumb, it’s advisable to save at least 10%-15% of your annual income for retirement. However, you’ll probably want to save an even higher percentage of your income if you’re going to stop working full-time by age 40. Saving 20% or more of your income might mean you have discretionary funds each month to have some fun after you pay all your bills, if you can keep your expenses low.
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Start a Side Hustle
If you’re really going to walk away from your 9-to-5 at age 40 and get a head start on your golden years, taking on a side hustle while you’re young is a smart idea.
You can supplement your income with flexible, part-time work to prevent you from depleting your savings and investments too quickly. You’ll need to stretch your money as long as possible if you’re going to stop working that early in life.
Carefully Budget and Track Expenses
With a retirement savings of just $1 million, you’ll need to carefully budget and track your monthly expenses. Be sure to only spend within your means, look for deals and discounts, and keep your expenses as low as possible. Unless you take on part-time work to add cash flow, budgeting will become critical to avoid credit card debt and financial issues.
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This article originally appeared on GOBankingRates.com: How Gen Z Can Retire With $1 Million by 40 (Without Sacrificing Fun)
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