Guest Column

Young professionals should focus on saving for retirement today, advises this Houston expert

It's National Retirement Security Week — and to celebrate, you need to start thinking about saving. Getty Images

National Retirement Security Week is upon us. In 2006, the United States Senate passed a resolution establishing the third week of October as a time to raise awareness about the importance of retirement savings and to encourage Americans to contribute to their retirement plans. The sponsors of the resolution hoped Americans would think about their retirement goals and assess their progress.

The Senate had good advice. Consider this: less than half of Americans have calculated how much money they will need to have in retirement. Additionally, the average person will spend a whopping 20 years in retirement. This data means you need to be proactive in your retirement planning, especially if you plan to retire early. Experts project that the average American will need 70 – 90 percent of their pre-retirement income to continue to live in their current standard of living. Even with well-funded savings, retirees will face challenges such as high costs of healthcare and the future of Medicare and Social Security.

For young investors

Research has shown that younger Americans, approximately ages 18 to 35, say the ideal time to retire is 60 years old. However, young professionals need to remember that the full retirement age for social security benefits is 67 years of age. Therefore, saving early in their career is key to attaining a livable retirement income.

Additionally, many young Americans are simply not saving for retirement at all. Data has demonstrated that two-thirds of Millennials have nothing saved. A rule of thumb is to continually save 10 to 15 percent of your income throughout your career for retirement. If you would like to retire at 60 years of age, you should be saving 20 percent or more.

First step: Start saving

Therefore, your first step should be starting to save today, and it should be a priority. By beginning to save as soon as possible, you benefit from the power of compound interest. Each year's investment gains build on the next year's gains. Ideally, you should begin saving for retirement in your early twenties at the beginning of your career. Saving early can reap big rewards later. However, if you are further along in your career and have not been saving, start now.

Many employers offer 401(k) plans, allowing employees to save for retirement before taxes are taken out of their paycheck. If your company offers a 401(k) plan, ensure you are enrolled and contributing at least enough to receive the maximum matching contribution. In 2019, the IRS allows you to contribute up to $19,000, and for those 50 and over, you may contribute $25,000. While 401(k)s have many benefits, there are some restrictions. For example, the plan may require you to leave the money in for a minimum amount of time before you are entitled to your employer's matching contributions. To ensure you understand your employer's plan, consult the plan administrator.

Not all employers offer retirement plans. If that is your case, or you are self-employed, look into an IRA. These accounts are another smart way to save for retirement. IRAs are controlled by you, not your employer. You can choose either a Roth IRA or a Traditional IRA. The difference between the two varies on issues such as age restrictions, income limits, and tax breaks. For an IRA in 2019, you may contribute $6,000 per person, or $7,000 for those 50 and over. Similar to 401(k)s, IRAs can be set up by automatic deduction if you so choose.

No matter your industry or the season of your life, take the time this National Retirement Security Week to educate yourself on your saving options, focus on your retirement goals, and begin the action steps necessary to be able to retire securely.

------

Marcellus Davis is a financial adviser with the Wealth Management Division of Morgan Stanley in Houston.

Trending News

Building Houston

 
 

Auburn University's SwiftSku took first place in this year's virtually held Rice Business Plan Competition, but it was the second place company that went home with over half a million in cash and investment prizes. Photo via rice.edu

In its 21st year, the Rice Business Plan Competition hosted 54 student-founded startups from all over the world — its largest batch of companies to date — and doled out over $1.4 million in cash and investment prizes at the week-long virtual competition.

RBPC, which is put on by the Rice Alliance for Technology and Entrepreneurship, took place Tuesday, April 6, to Friday, April 9 this year. Just like 2020, RBPC was virtually held. The competition announced the 54 participating startups last month, and coordinated the annual elevator pitches, a semi-finals round, wildcard round and live final pitches. The contestants also received virtual networking and mentoring.

Earlier this week, Rice Alliance announced the seven student-led startups that then competed in the finals. From this pack, the judges awarded the top prizes. Here's how the finalists placed and what won:

  • SwiftSku from Auburn University, point of sales technology for convenience stores that allows for real time analytics, won first place and claimed the $350,000 grand prize from Goose Capital. The company also won the $50,000 Business Angel Minority Association Prize, the $500 Best Digital Elevator Pitch Prize from Mercury Fund, and the $500 Third Place Anbarci Family People's Choice prize, bringing the company's grand total in cash and investment prizes to $401,000. The company also won the CFO Consulting Prize, a $25,000 in-kind award.
  • AgZen from the Massachusetts Institute of Technology, a pesticide alternative spray and formulation technology company, won the second place $100,000 investment prize (awarded by Finger Interests, Anderson Family Fund, Greg Novak, and Tracy Druce). The startup also won a $300,000 Owl Investment Prize, the $100,000 Houston Angel Network Prize, the $500 Best Energy Elevator Pitch Prize from Mercury Fund, and the $1,500 Third Place Anbarci Family People's Choice prize, bringing the company's grand total in cash and investment prizes to $502,000. The company also won the $30,000 in-kind Polsinelli Energy Prize.
  • FibreCoat GmbH from RWTH Aachen University, a startup with patented spinning technology for the production of inexpensive high-performance composite fibers, won the third place $50,000 investment prize (also awarded by Finger Interests, Anderson Family Fund, Greg Novak, and Tracy Druce). The company also won the $100,000 TiE Houston Angels Prize and the $500 Best Hard Tech Elevator Pitch Prize from Mercury Fund, bringing the company's grand total in cash and investment prizes to $150,500.
  • Candelytics from Harvard University, a startup building the digital infrastructure for 3-D data, won the fourth place $5,000 prize.
  • OYA FEMTECH Apparel from UCLA, an athletic wear company that designs feminine health-focused clothing, won the fifth place $5,000 prize. The company also won the $5,000 Eagle Investors Prize, the $25,000 Urban Capital Network Prize, and the $1,000 Second Place Anbarci Family People's Choice prize, bringing the company's grand total in cash and investment prizes to $36,000.
  • LFAnt Medical from McGill University , an innovative and tech-backed STI testing company, won the sixth place $5,000 prize and the $20,000 Johnson and Johnson Innovation Prize, bringing the company's grand total in cash and investment prizes to $25,000.
  • SimpL from the University of Pittsburgh, an AI-backed fitness software company, won the seventh place $5,000 prize. The company also won the $25,000 Spirit of Entrepreneurship Prize from the Pearland Economic Development Corp., bringing the company's grand total in cash and investment prizes to $30,000.

Some of the competition's participating startups outside of the seven finalists won monetary and in-kind prizes. Here's a list of those.

  • Mercury Fund's Elevator Pitch Prizes also included:
    • Best Life Science $500 Prize to Blue Comet Medical Solutions from Northwestern University
    • Best Consumer $500 Prize to EasyFlo from the University of New Mexico
    • Best Overall $1,000 prize to Anthro Energy from Stanford University
  • The Palo Alto Software Outstanding LivePlan Pitch $3,000 Prize went to LiRA Inc. from the University of North Carolina at Chapel Hill
  • The OFW Law FDA Regulatory Strategy Prize, a $20,000 in-kind award went to Paldara Inc. from Oklahoma State University.
  • The Silver Fox Mentoring Prize, which included $20,000 in kind prizes to three winners selected Ai-Ris from Texas A&M University, BruxAway from the University of Texas, and Karkinex from Rice University as recipients.
  • The first, second, and third place winners also each received the legal service prize from Baker Botts for a total of $20,000 in-kind award.
  • The Courageous Women Entrepreneurship Prize from nCourage — a $50,000 investment prize — went to Shelly Xu Design from Harvard University.
  • The SWPDC Pediatric Device Prize — usually a $50,000 investment divided its prize to two winners to receive $25,000 each
    • Blue Comet Medical Solutions from Northwestern University
    • Neurava from Purdue University
  • TMC Innovation Healthcare Prize awarded a $100,000 investment prize and admission into its accelerator to ArchGuard from Duke University
  • The Artemis Fund awarded its $100,000 investment prize to Kit Switch from Stanford University
The awards program concluded with a plan to host the 22nd annual awards in 2022 in person.

If you missed the virtual programming, each event was hosted live on YouTube and the videos are now available on the Rice Alliance's page.

Trending News