PhotoOnly 31 percent of millennials have a retirement savings plan in place, according to research from three firms engaged in financial research.

People in their 20s and 30s need to be saving for retirement, says Michelle Perry Higgins, author and financial planner. Precisely because they have so much time before retirement, Higgins says planning now will pay off handsomely in the future.

In her book, "College Poor No More," Higgins walks millennials through the process of beginning a career and setting up a budget. Establishing good financial habits early, she says, will make it easier to save for retirement.

"Visualize various buckets and plan to fill them each to overflowing," Higgins said. "Consider one bucket for retirement, one for emergency reserves, one to pay down debt, and one for day-to-day expenses."

Save 20 percent for retirement

Higgins says millennials should earmark 20 percent of their annual earnings toward retirement savings. She acknowledges that can be a tough sell when she's talking to people in their 20s and 30s.

"Retirement seems like an eternity away at this point in your life," Higgins said. “But please don’t wait."

There are two good reasons to begin saving for retirement now. The first is the faster you remove that money from your everyday budget, the less you'll miss it.

The second is the power of time. The longer you have to invest in appreciating assets, the more your wealth will grow.

$1 million by age 65

MoneyUnder30, a personal finance site for millennials, offers up the following example: suppose you put just $50 a month into your company 401(k) plan at age 22 and your company provides a 50 percent match.

After that, you increase your monthly contribution by the same amount as any pay raises. At age 65 you'll have a nice retirement nest egg of close to $1 million.

Higgins says young people should take advantage of their employer's retirement plans, especially if the employer also contributes to it.

Investment services

Other options include a growing number of investment services that provide online stock trading platforms as well as optional investment advice.

Automated investment services like Betterment and Wealthfront are known as "robo advisors," taking some of the time out of wealth management. They offer retirement planning, diversified funds and low fees, along with an investment strategy tailored to individual investors.

Higgins says the important thing is to take the first step -- start saving. She recommends working with a financial planner who can help guide your overall financial position as you get older.

Taking these steps now could mean that 30 years from now, there will be much less need for retirement catch-up advice for people in their 50s.


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