Warren Puy Arena- Director of Information Systems

No other time in recent history, since the great depression, has been more challenging to our personal finances than the one in which we live. A combination of slow economic grow, high unemployment, combined real estate and financial assets deflation, and the essential “meltdown” of our nation’s financial system have made a big dent to our retirement accounts and changed people’s perception about their retirement. As in any previous downturn, an increasing number of people are unhappy with the available retirement investment options and the institutions in charge of managing their retirement funds.

While older generations have had the greatest negative impact on their retirement accounts, successful Gen Xers and older investors recognize the value of long term investment strategies they applied when they were the same age as the current Gen Yers.

Here are some tips:

Start saving for retirement as early as possible. The earlier you begin the easier it will be to achieve your financial goals disregarding the ups and downs, boom/bust cycles of the economy. Let the power of compounding work magic on your retirement account. Start saving the moment you receive your first paycheck!!

Pay yourself first. Put money away for your retirement and other financial goals (emergency fund, house down payment, etc.) before you pay anything else. The best way to do this is to have the money deducted automatically from your account as soon as it is deposited by your employer.

Maximize your savings. Aim to save 20% of your income but no less than 10%. Gradually increase this percentage as you get older. Contribute the maximum allowed to your employee sponsored retirement plan. Especially at companies such as PKM where there is a matching contribution to the plan.

Diversify. Not only diversify across the different asset classes (stocks, bonds, cash, real estate, etc.) but also diversify your investments inside each class (e.g. make sure you own domestic large, mid and small cap stocks as well as international stocks in your portfolio). You should also protect your retirement from potentially higher taxes in the future by contributing to a Roth plan. This is especially attractive to the younger investor as his/her investments will grow “tax-free” for a longer period of time without having to pay taxes on the principal and earnings during retirement. PKM offers a Roth version of its 401K plan.

In short, if you are part of the millennial generation and have not yet started to save for retirement, you may want to consider doing so now. Today’s investment options allow you to achieve a high degree of diversification and, first and foremost, “time is on your side”.