For the millennial generation, it’s time to start thinking of saving for your retirement. What. That’s 40 years away! That’s why investment advisors say it’s the perfect time for college students to think about retirement savings and to learn what is 401(k) savings as soon as they get their first job. Millennials in the workplace have many investment options.

Follow our investment tips for the millennial generation. (Credit: Randy Glasbergen)

Disclaimer: Consult an investment advisor of your own to discuss options before making any investment decisions.

No reliance on Social Security

Unfortunately, in 40 years’ time, millennials will not be able to rely on Social Security and pensions to carry them through their retirement. A recent Pew Research poll found that 51% of millennials believe they will get no benefits from Social Security, and 39% predict they will get benefits at reduced levels. Investment advisors say that it is imperative that the younger generations start thinking of saving for their retirement now and building their own wealth as soon as possible.

Where millennial generation gets advice

Frankly, “Millennial ‘investors’ have trust issues ,” said Elliot S. Weissbluth in the article posted on CNBC October 29, 2013. Seeing what happened during the 2008 financial crisis, millennials want to be cautious about their investments. Weissbluth said: “Millennials are more likely to form opinions based on what they hear from friends, social networks and their own research.” In addition, “Millennials will demand advisors who incorporate cutting edge technology into their practice and, equally important, who represent their values: collaboration, transparency, innovation, engagement and access,” said Weissbluth.

Invest in company 401(k)

As soon as you get your first job, one easy way to invest in your retirement is to participate in your company’s 401(k), or if your company doesn’t offer one, start an IRA – Individual Retirement Account. A 401(k) is an investment plan provided by an employer who takes money out of each paycheck automatically and invests it in the plan. An IRA is the same type of plan offered by financial institutions. Making investing in retirement something that is automatic and not something you need to worry about, plan for or make decisions for each month makes it easy to save.

Saving now vs. paying off loans

You’re probably thinking that when you just start out in the job market, you won’t be making much money to start with, plus you have your student loans to pay off. Investment advisors say that even small amounts reserved for saving for retirement make a big difference over the long term. Patrick O’Shaughnessy, principal and portfolio manager at O’Shaughnessy Asset Management and author of the book “Millennial Money – How Young Investors Can Build A Fortune” is a millennial himself and knows the importance of saving early.

In “Millennial Investing with Patrick O’Shaughnessy ,” posted in The College Investor November 24, 2014, by Robert Farrington, O’Shaughnessy said:

“There is nothing better you can do for your financial health than making steady, early investments in the global market. Even if the amounts are small, you will be very happy in a few decades that you made a wise early decision. Start with 5% of your income. Set it up so that your 5% is automatically taken out of every single paycheck and invested.”

You have the time to weather storms

The market is cyclical; it has bull markets (times of growth), and bear markets (decreases in value). If you have 40 or 50 years to wait until retirement, then you might consider one strategy that is called “buy-and-hold,” meaning that you keep your money invested in a portfolio of stocks, bonds and/or mutual funds and don’t remove it, even if the market goes down, because over time, it is likely to go back up, keeping you from falling behind on your retirement savings.

In the “Understanding the ‘Millennial Generation’ ” blog posted on InvestorInsight.com March 18, 2014, Gary D. Halbert said:

“Buy-and-hold strategies deserve a place in your investment plan. But don’t buy into Wall Street’s mantra that buy-and-hold is the only strategy that works long-term. …Stocks and bonds are a big part of most investors’ portfolios, and both are subject to wild swings – up and down over time… [So,] split your investment money among carefully-selected buy-and-hold strategies and so-called ‘alternative strategies’ that have the ability to get out of the markets and move to cash (money market fund) during extended downward corrections and bear markets.”

Will you consider saving for retirement when you get your first job?