Saving for Retirement: Why start early?
When we are young we often tend to be a bit extravagant. There is a tendency for most youngsters to spend a lot more and save practically nothing. However, it is important for youngsters the need to save. This is more so for their retirement. That too they need to do so quite early on in their career. Let us try and understand why it is important to start saving early for retirement
The earlier you start the greater the effect of compounding
You need to realize that to save well for your retirement you should start saving as early as one’s early 20s. There is a reason for the same as well. One top reason for doing so is that you can get a better effect of compounding. You could start with a small savings. However in case you are disciplined in your savings over a long period of time this would indeed be a large retirement corpus. This is because of the compounding effect. The longer the time the better you would get the effect of compounding. Thus towards the end the amount save would increase by massive amounts and indeed a massive amount to take care of all your retirement years.
It is easy to save in your early age
In case you are a youngster you also need to realize that it is easier to save early on in life. The reason is that your liabilities are less. You may not have still started a family. Once you have a family to support you can in no way take things for granted especially your finances. Many of the expenditure which you have to make when are in your middle life is mandatory. Most of these expenditures are something which cannot be avoided. For example your child’s school fees and so on. This is a time even if you want may not be able to save. However for a youngster who still does not have to support a family is fortunate enough. This is because he has limited liabilities and thus can save easily if he so desires.
In conclusion, we hope we have been able to explain the importance to start early to save for your retirement. If you want any type of financial consultation please get in touch with us at “ The Accounting and Tax”.
