Saving for your retirement: Why it’s important?
When we are young, and might have just started earning, most of us do not seem to understand the importance of saving for our retirement. Thus when we are in our 20s or 30s it is hardly seen on the horizon. What you need to realize is that it is important to save for your retirement. The best way to get started in this direction is to target saving 10% of your monthly income in the initial years. Thereafter once you have more income and more information you could adjust the same as per your needs.
How much money might you need to retire?
As a youngster you could get started on the journey with the idea that you need a million dollars or more once you reach your destination. What you need to consider though is that in order to get to one million by age 65, a 30-year-old you would have to save $8,500 per year for 35 years, assuming a 6 percent annual return.
It would not be easy to save in your 30s
What you must realize that in your 30s it would not be too easy for you to save. By then you would have a family to support. Apart from this you need to pay on your mortgage, pay towards car and children expenditure. Often if you are disciplined enough to save you may not be able to save for retirement once you are in your 30s.
Why you must not leave it for too late?
Some even have the idea of fully paying off their mortgage payments early and there after start saving for retirement. However by the age of the 50s, would get only a limited time for your saved money to compound to meet your expected levels of retirement savings.
Thus all in all leaving savings towards retirement is something which may not be too feasible. This is why it is best to start saving for retirement early. By staring to save early you would get the benefit of time on your side which could do wonders for you in terms of the compounding effect, if you are to save for retirement.
So in case you are young and still have not started saving for retirement, its high time you get started. This could even be a small amount. But do get started and have a financial discipline to save.
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”.
