Workers between the august of 20 and 30 are looking at employment benefits more than salary of late, causing many companies to focus more on their benefits packages. Why such an interest, especially for several options that will take money away from you now, only to hopefully be usable decades from now? The reason starts with a simple factor thing called financial education combined with experience.

People under the age of 30 are seeing the struggles older people are having when it comes to saving money for retirment and staying ahead financially. The irony is that many of these people are struggling because they did not begin planning and contributing earlier in life. For example, someone who begins their retirement planning at 40 may need to contribute $1,500 a month to a plan just to have a respectable amount of financial safety when they reach 65. At the same time, someone who starts at 20, even with basics like social security contributions and a 401k can pay $500 a month and have the same value as the 40 year old, or even more.

Biggest Mistakes When Planning Retirement Budget

We often forget that time is money and that is the biggest mistake many of us make when we think about retirement. What we do not understand is that time is money does not necessarily mean your time is worth money. Instead, think of it as money grows over a period of time, therefore, the more you invest now, the less you will have to invest down the road.

If you could spend $500 a month towards your retirement and have as much saved up by the time you retire as someone paying three times as much, wouldn’t you say that you planned that out well? We often overlook that value of planning early whether it’s financial needs or healthcare needs. The good thing is that assistance with both is available, and we have plenty of time to contribute. The more you can contribute, especially to social security, the more you get back and many of these programs also come with tax benefits.

Will Medicare & Social Security Really Help?

Everyone who reaches the age of 60 or older has to take a serious look at their upcoming retirement benefits and see what they will really get. The biggest impact Medicare will have on you is that it will help in keeping healthcare costs low but it will also give you the advantage of having access to more doctors, facilities and so forth. Because it is so widely accepted, Medicare users have less difficulty finding the right plan that fits all their needs.

On the other hand, social security is more direct. You can go online at any age and figure out what you are going to get back in social security. Based on what you’ve already contributed and when you start taking your monthly payments, you may be receiving thousands of dollars a month. These are great options and can drastically help you in your retirement, especially in your later years if funds are limited.

Options To Research Now

It’s never too early to plan for retirement as again, the early you start, the less you will have to contribute. If you are working for a company that offers great benefits packages, consider going over these options with your human resources director:

• 401k: One of the most common ways to save for retirement, many love this option for two key reasons; the first is that their employer offers a match contribution, meaning you get free money while you work. The second reason is because you are able to borrow from your contributions and repay without interest. This is a big advantage for those who are worried about investing in their retirement in case they need the money at one point and do not want to pay any penalties. In that case, you can borrow against your account without a penalty and either pay it back or pay taxes on what you took out.
• HSA: A healthcare savings account may not seem like something you need to consider, especially if your medical costs are currently low. However, if you are eligible for this option, it’s a great way to save on your taxes as contributions to this account are tax deferred. Even something as small as $50 a month could give you thousands of dollars if and when you need it.
• Increasing contributions: While we want to max out the money we get on each paycheck, especially after all the deductions are made, it’s important to know the long-term value of each deduction. If you can lower your take home amount by $100 a month but it actually gives you $125-$150 a month worth of benefits, would that be a good investment?
• Averaging out your cost of living: One common mistake people make as they factor their cost of living is that they remove items they think will not be needed or be paid for when they retire. The best examples of this are their home and healthcare costs. Just because you have paid off your house does not mean you will not have to pay thousands a month towards it between taxes, insurance, upkeep, utilities and more. Even with Medicare, you could still need to pay hundreds of dollars a month for coverage including any special needs you may have. Consider both of these when setting a budget.

It’s nearly impossible to guess what something will cost in 10 years, let alone 30-40. However, if you can put a little away today, you are not only going to get the benefits of having it down the road, but you are also going to benefit from current and long-term advantages that these programs offer. It’s never too early to learn about Medicare and current options you have to save on healthcare costs. These programs have been proven to help people who have made a modest living throughout their lives live a comfortable retirement which is why they are offered to people at all income levels. This is the smartest and safest way to invest your money long-term and maximize its impact.