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5 best resources for millennials without pensions

A pension is an employer-sponsored retirement plan that provides a monthly income once you retire. Employees will make contributions to a pool of funds set aside for their future benefit so that they can receive periodic payments once they're ready to retire. Pensions have allowed employees to reap the rewards of retirement but in recent years companies have started to offer defined-contribution plans instead because they are less expensive and easier to manage. 

This is why millennials will need to find alternatives to a workplace pension when saving for retirement. It's a good idea to start saving earlier in life so that you have a chance to accumulate as much as possible. It's important for young adults to make the most out of their financial opportunities so that they can plan for a smooth retirement. Here are 5 excellent resources to help millennials without a pension plan. 

1. Open an IRA

An individual retirement arrangement (IRA) is an excellent alternative to a pension that allows you to save money in a tax-advantaged way. The tax benefits from an IRA allow your savings to potentially compound and grow very quickly as you continue to contribute to your account.

Bitcoin IRA is a self-directed individual retirement account that allows you to invest cryptocurrency into your savings account. With an IRA you can take advantage of potential tax-deferred or tax-free growth and obtain access to a wider pool of investing opportunities. If you contribute the maximum amount to your IRA you can potentially increase your savings for retirement. 

Roth IRAs are very popular with millennials because they allow you to pay taxes on your contributions now so that you won't have to worry about paying taxes on growth taken from qualified withdrawals after you retire. If you start making regular contributions to your IRA this will allow your savings to grow. Investing in an IRA can help you maximize your long-term gains and minimize your financial losses.

2. Hire a Financial Planner

A financial planner specializes in helping people plan and prepare for retirement. They will help you determine how much money you'll need for retirement and develop a personalized strategy to help guide you there. Financial planners will provide you with a clear path to success by helping you build a retirement plan. 

A financial planner can help millennials tackle their student loan debt and their everyday expenses.They can provide the younger generation with the tools that they need to better manage and grow their money. If you start preparing for retirement early this will allow your savings account to gradually grow each year until you are ready to retire. 

3. Start an Emergency Fund

An emergency fund is a personal budget that you have set aside to prepare for unexpected expenses. It's important to start building up an emergency fund as you start to prepare for retirement. Millennials should save a little bit of their income each month in order to boost their emergency savings. 

 You should have an emergency fund set up that can cover 3 to 6 months of your expenses. Young adults should be aiming to gradually increase their savings each month. Cutting back on your major expenses can help it steadily grow. Life has a way of springing financial surprises and setting up an emergency fund can help soften the blow.

4. Life Insurance Can Help You Save for Retirement

Buying life insurance will help you save up more money to invest into your retirement. Life insurance can be a useful retirement savings tool for if you are able to build up cash value from your insurance policy. The cash value is the remaining balance after the premium has been applied to the insurance costs. You can withdraw this money from your account after it has steadily built up, then add it to your retirement savings. This income is tax-free and can be utilized as an excellent source of income once you are ready to retire.

5. Set Up a 401(k) Plan

A 401(k) is a profit-sharing plan that allows employees to save a portion of their income for retirement. Many millennials are setting up 401(k) plans because the funds come directly from their paycheck and employers will often match their contributions to further build up the account. A 401(k) is funded by the employee which means you have full control over how much you would like to contribute. 

Pensions are increasingly being replaced by 401(k) plans in the workplace. The main difference between each of them is that a pension plan guarantees a monthly check once you retire, but a 401(k) does not. A 401(k) is a defined contribution plan which is much cheaper for employers to maintain and fund. If you are worried about if your pension will have enough for you to retire comfortably, then you could also consider funding a 401(k) to ensure that you are prepared for retirement. 

Start Saving For Retirement Today

Millennials need to start thinking about their potential retirement before it's too late. It can be difficult to prioritize retirement at a young age and focus on increasing your savings. This is why it's important for millennials to participate in savings plans and plan out their retirement goals. Millennials need to take control of their finances and take advantage of any assistance their employers may offer. The younger generation will need to always keep their retirement savings goals in mind so that they can be better prepared for the future!

First Midwest has ideas to help you get started.  Visit FirstMidwest/Wealth to find an Advisor.   

This article was written by Jon Harris from Benzinga and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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