For people in their twenties and thirties, saving for retirement may seem like a problem that they will have to deal with in the future, but the truth is, the sooner you start saving, the better off you will be. Retirement is a dream that we all share, but unfortunately, it takes money to retire, and that requires you to start saving right now! Having more money to rely on once you retire isn’t the only benefit to saving early. The following is a list from your financial advisor in Naples of some of the top reasons to start saving for retirement while you are young:
- It could cost you to wait: Compounding interest allows you to make money on your money, and the longer your money has a chance to sit in your retirement account, the more opportunity it has to keep growing. If you decide to wait to start saving, you won’t only be missing out on the money that you directly put into your retirement account, you will also be missing out on compound interest.
- If you don’t use it, you lose it: There are annual limits on retirement account funding – from IRAs to 401(k)s – and although there are catch up provisions in later years for some, if you don’t utilize the annual contributions you can make now, you may regret it later.
- Flexibility and a plan of action: It can be difficult to find a career that you love, especially in an economy that is still being rebuilt. Having savings will not only set you up for retirement later on, but it can give you the freedom to search for a job that you can be happy with, rather than simply settling for the first one that comes along. Having savings stashed away also makes it easier to deal with emergencies and unexpected situations without getting into debt.
Now that you’ve learned some of the benefits of saving at an early age, you are probably wondering how to start saving! Stay tuned for our next blog to learn how!