Here’s why starting retirement savings while young is worthwhile.
Jump starting your savings
Saving for retirement is something most adults should be doing early on. Experts suggest that people begin building retirement funds as early as their 20s upon landing their first full-time job. Unfortunately, many young adults visualize retirement as a long way off. Rather than save, they concentrate on paying off college debt and car and home loans and forgo thinking about retirement until their 30s, 40s, and even 50s. Unfortunately, years go by fast and not saving or inadequately planning for retirement can cause major repercussions in later years. Let’s look at valuable things we can learn about saving for retirement when we’re young – and why we should encourage young people to begin saving for retirement today.
- Sprouting savings! Savings can grow progressively and compound over time when you start young, diversify, and invest for growth. Per rand.org, “…small sums saved at an early age can turn into large nest eggs for retirement.” Starting young also gives investors time to adjust plans to accelerate savings. This includes creating a well-balanced portfolio to maximize savings.
- Controlling your punch card! Saving for retirement early allows people to retire at an appropriate age rather than being forced to keep working. In the U.S., most people are eligible for full Social Security benefits once they reach full retirement age, which is currently either 66 or 67, depending on birth date. In the future, retirement age is expected to be raised to 70 and beyond due to an anticipated shortage of Social Security funds. Saving for retirement can give people the flexibility to retire when they are ready, rather than at a prescribed age.
- Maintaining independence! Retirement savings give people the tools to live independently in their golden years. Building retirement funds allows people to oversee their own finances. It gives them opportunities to freely plan where they will live and pursue retirement dreams like moving to a warm climate, traveling, playing golf, or spending more time with family. Check out this article on the best places to retire in 2025.
- Reducing stress! High cost of living, increased health care expenses, and modest boosts to Social Security are deeply problematic for many retirees. Beginning early and saving adequately for retirement reduces financial strain on senior citizens. Failure to save enough for retirement can create serious gaps between income and expenses. In extreme cases, this may lead to mandatory dependence on government programs or other family members for survival. Whereas, having enough money to cover expenses and emergencies provides the peace of mind that seniors deserve in their retirement years.
Don’t give up!
There are numerous benefits to starting to save for retirement at a young age. However, those coming late to the game should not give up. Click here to learn useful tools for those getting a late start on retirement savings.
Disclosure: This article is for general purposes only and is not a substitute for professional advice.
