It’s not uncommon to feel like you’re too young to start thinking about retirement. After all, you’ve got more pressing concerns in your 20s and 30s than making sure that you’ll be able to retire comfortably someday. Perhaps you dream of pursuing photography in retirement or travelling the world.
But while it might seem difficult to save money now when there are so many other demands on your income, starting early will actually help you reach your retirement goals faster and with less stress — and that’s what this article is all about.
Your Money Will Grow in the Long Run
The power of compounding means that the longer you save, the more interest you earn and the more money your investments will grow.
The importance of saving early: If you start saving when you’re young (e.g., in your 20s), then it’ll take less time than if you wait until later on in life when finances are tight and life becomes more expensive. This means that investing earlier can help give us better odds of reaching our goals despite unexpected expenses like medical bills or emergency repairs on our homes or cars.
You’ll Be Able to Retire Earlier
If you’re planning on accessing your pension early or retiring earlier than 65—say around 60 or 50—then it takes even more aggressive savings strategies like using some of your 401(k) funds before retirement and/or investing in stocks rather than bonds or cash equivalents like CDs.
If your goal is to retire by age 60 with enough money not only to live on but also leave some behind as inheritance for family members or charity work, then saving aggressively makes sense because it allows greater returns over time on a smaller amount invested each month versus someone who starts later but has a higher monthly contribution rate due to having more time remaining until their “magic number” arrives (in this case 45 years old).
It’s Easier to Start Saving Early
The earlier you start saving, the more you will have. The earlier you start saving, the more time your money has to grow. The earlier you start saving, the less you will have to save each month or year. The earlier you start saving for retirement, the less time it will take for your nest egg to reach its full potential!
Additionally, by starting early and maximizing every dollar put into a retirement account (like a 401k), what may seem like small amounts now can become larger amounts later on in life when compounded over time with interest rates on your savings accounts or inflated investments from companies offering employer matches.
You’ll Have a Chance to Learn About Saving and Investing Before You Retire
It’s never too early to start planning for retirement. If you’ve been ignoring the topic until now, it might feel overwhelming—but don’t worry! You’ll have plenty of time to learn about the various options available for saving and investing in your golden years.
You can read up on the different types of investments, how they work, and what kinds of accounts are available (such as IRAs). You also should familiarize yourself with retirement savings vehicles such as 401(k) accounts or Roth IRAs (individual retirement accounts).
You Could Get Your Company’s Help in Saving for Retirement
Many corporations, particularly banks and insurance companies, offer their employees a 401(k) plan.
These plans allow you to save money on a pre-tax basis and receive matching funds from your employer. You can also invest in other types of retirement savings vehicles such as IRAs or Roth IRAs.
Many companies will offer incentives to help you be successful at saving for retirement, including matching funds or subsidizing fees on the investment accounts you choose.
See our post on the benefits of starting a business in Dublin as well.
Retirement Is Getting More Expensive
The cost of living is going up, and it’s not just because of inflation. The cost of food, housing, utilities (like electricity), transportation (gas), education and healthcare are all rising faster than the rate at which your paycheck can keep up with them. If you don’t prepare for retirement now, these costs will be even more expensive when you get there.
You Need to Do Less Guesswork and Planning When You Save Earlier
If you’re starting your retirement savings late, it’s likely that you’ll have to do more guesswork and planning when it comes to saving for retirement. This is because it’s going to take longer for you to save enough money than if you started earlier.
You’ll have more time to make adjustments along the way since saving earlier allows more space between your current situation and when you actually retire (which is usually in your 50s or 60s). You could also save even more money by adjusting how much of your salary goes into an account each month as well as how much riskier investments are used in order to reach a certain goal amount within a specific period of time.
So, if you’re not already saving for retirement, we’d encourage you to start now. Even if it’s just $100 a month, think of how much that could grow into over time. And remember: the sooner you start planning for retirement and saving for it, the better off you’ll be when it comes time to retire!