Pensions, health insurance for life and other fringe benefits that career workers relied on for decades are becoming a thing of the past. At the same time, as the eligibility age for Social Security rises, the projected retirement costs for America’s younger generations are alarmingly higher than what they were for their baby boom “elders.”

A recent survey of more than 200 financial advisors found that when members of Genera-tion X and Y are ready to retire, they will need a minimum of between $1.4 and $2 million to maintain the standard of living provided by a $75,000 annual income. For those who plan to enjoy an even higher level of retirement in-come, the amount could be significantly higher than $2 million, which is a daunting figure for someone in their 20s, 30s or even 40s to face. However, smart financial strategies imple-mented early in the Gen X and Y career can help make that goal a reality even for those with smaller incomes. Here are three tips that Gen X and Y can use to ease the burden of saving for a costly retirement.

1. Cut costs and maximize savingsThe cardinal rule in any long-term saving strat-egy is to keep your expenses low and save as much as you can while still living comfortably. Controlling your costs even in small amounts can save a lot of money in the long run. For instance, cutting a $3.00 cup of coffee out of your daily expenses over the course of a 30-year career would put nearly $33,000 in your retirement fund — and that figure does not include interest that would have compounded for all those years.

Coffee is just one example of how much can be saved on small cutbacks. A far greater im-pact can be felt in the largest single expense most people have: rent or a home mortgage payment. Choosing a home or a rental at a price that is easily affordable can provide the budget flexibility to significantly ease the burden of funding a retirement plan. A housing

payment that allows enough cushion to put $300 a month into a retirement account would yield $2 million for a 25-year-old in 40 years. Another often overlooked way to boost gains is by lowering investment costs. Transaction and management fees are difficult to avoid, but seeking out investments with lower fees will go a long way toward boosting long-term gains.

2. Take advantage of tax-deferred accounts and employee 401(k) plans. Starting now.IRAs, Roth IRAs and 401(k) plans provide a number of options for younger workers to begin building their nest egg. Employers often pro-vide 401(k) matches when an employee enrolls in their plan. While these contributions can range anywhere from 1% or 2% into the double digits, not taking full advantage of an employer contribution by ensuring you are contributing at least enough to get the full match, is leaving free money on the table. If you are already taking full advantage of the employer match, you should also think about a Roth IRA or Roth 401(k), particularly if you are just starting out and your tax rate is on the lower end of the scale. Roth accounts allow you to put away after-tax money that you can then draw on tax free during retirement. The other advantage to a Roth IRA is that if you ever need the funds during an emergency, you can withdraw your contributions without incurring a penalty, unlike your 401(k).

3. Plan to work longer than your parents The average life expectancy for men and women in the United States has increased over the last several decades, and it is impor-tant for Gen X and Y to adjust their retirement

Generation X and Y: Start early, plan farther ahead and save more

expectations accordingly. In the early ‘50s, life expectancy for women and men was 71 and 66, respectively. For those born in the early 2000s, the number increased by about eight years, or more than 10%, to 80 for women and 75 for men. These figures suggest that Gen X and Y should not necessarily plan to retire in their early 60s like many of their parents have or soon will. Planning to work until your late 60s or even 70 is becoming more of the norm than the exception. Working later obviously leaves less time to enjoy retirement, but it also allows more time to build up retirement funds. It also will guarantee much larger Social

Security payouts by making sure more working years at higher income levels are factored into the payment equation and by delaying drawing from Social Security until a later age, which also boosts the payments significantly.

Factoring these three simple tips into a retire-ment strategy — and beginning to execute them now — will go a long way toward achiev-ing a stable and enjoyable retirement for today’s young working generation.

The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. Please note that investing involves risk.

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