Will You Have Enough For Retirement?
When is a good time to start saving for retirement? The answer is “as soon as possible.” You may think you have decades to prepare, but the longer you wait to get started, the less time you have for compounding to work its magic. “Start now” was the best Roth IRA advice I ever got.
How do you know how much money you will need to save and, more importantly, will it be enough? Asking yourself the following questions should help you begin to answer that difficult question.
When Do You Want To Retire?
Despite the fact that we are living longer and healthier lives, many people are jumping on the band wagon of early retirement. Not everyone wants to work until age 65, and who can blame them? If you want to retire early, you will have to deal with the fact that you have fewer years to save money and more years to live off the money you’ve put away. When you want to retire will play a big role in how much money you have to save throughout your working years.
Do you have an amount in mind? Many people blindly contribute to retirement vehicles with no real idea of how much they will need for retirement. If you don’t know how much you will need, how can you possibly save the right amount? Check out the world wide web and you will likely find some retirement calculators which help you pin down a number to work toward. Of course no one can predict how long they will live or what expenses they will incur along the way, however you get a good idea using one of these nifty tools.
How are you managing your money today? Still think retirement is eons away? This may be the case, however how you manage your money today will have a huge impact on whether or not you can retire in comfort or work until you are 90. If you are blowing though your cash in your youth, racking up huge debts or otherwise not managing your money well, it could literally take a lifetime to undo the damage. In the meantime you restrict your ability to save for retirement which could result in entering your golden years depending on Social Security to pick up the slack (not a wise move).
In order to save enough money for retirement you must begin at an early age and make your savings contribution part of your day-to-day budget. Do not think of it as an option, rather another “bill” that you have to pay out of your earned income. Otherwise you might find yourself coming up short in the years when you need it most.
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The truth is after this recession many people will have to delay retirement for many years.
Good advice. Think of it like this: you spend 22 years supported by your family, you spend 40 years working, you spend 25 years living off your “nest egg” and Social Security. Start saving a lot as early as possible and invest it appropriately. Most young people have difficulty grasping that one day people will be singing happy birthday and there will be 65 candles on the cake. The choice you have that day will depend on your savings program over many years.
Great article. More young people need to know that the time to get started is NOW.
You also point out that people are living longer. You could easily be retired for 25 years or MORE. That requires some planning. Costs of living will certainly go up during that period when your are retired.
I have a new book coming out, “Help! My 401(k) Has Fallen – And Must Get Up!” which reveals secrets about the 401(k) which can help you get more out of it. One thing which is needed is better education for employees on how to use their plan.
You can also get a free report through my website – “The 5 Biggest Problems With 401(k) Plans – And How To Fix Them”.