Everyone dreams of one day retiring to the lifestyle they have always dreamed of. Those days of living life on your terms are not that far off for many of us, but when you’re young, vibrant, and full of life, it is difficult to think about giving it all up. After all, for you – life has just begun.
Today, the world sees more people living longer than before so the need to start saving early is a crucial element that can make your retired life as comfortable as possible. Within this infographic about debt relief we outline 10 reasons why you should start building that nest egg now.
1. Your Money Works For You
When you set money aside it doesn’t just sit there but can start working for you right away. There are several ways this can happen, and the most common way is with compounding interest payments. When you invest in a variety of different instruments, you can expect a reasonable return on that investment. The money you earn in returns is added to your investment balance so it can begin to earn money for you too.
2. Tax-Deferred Money
Even if you put your money in a savings account, any cash that is set aside for retirement is money that you don’t have to pay taxes on. At least not until you’re ready to use it. When you are retired, the taxes you pay will be considerably less than the taxes you pay during your working years.
3. Save Now, Save Less
Because the money you put into savings will grow over time, you won’t need to save as much if you start in your 20s than if you start in your 40s. Starting early means you have time to build up a sizable nest egg without having to shell out a lot of cash. The longer you wait, the more you’re going to have to put in the pot.
4. You Save On Taxes Now
For every dollar you set aside for your retirement, that is one dollar less you have to pay taxes on today. Any before tax contributions is not considered taxable income so that means you’ll pay fewer tax dollars on your income than you would have if you weren’t saving.
5. Vested Money Is Portable
Whether you stay with one company during your entire working career or you move from company to company, your vested earnings are portable. As long as you roll them over into a new account, all of that money can be pooled to build up your savings. So, even if you change jobs after you have been vested, all that money goes with you.
6. Keeps You Honest
When you set up a consistent savings plan, you develop better discipline. In most cases, the money you save is deducted directly from your paycheck so you never get the chance to be tempted to use the money for other things. You get used to not having that money so you never have to think about it.
7. It Doesn’t Take a Huge Commitment
Starting a retirement plan early doesn’t require a huge commitment. In most cases, you can participate in an employee sponsored program with just a few dollars a week. If you start when you are young, those few dollars may be all that you need to build up a tidy little nest egg in the future.
8. You’re In Control
Depending on the plan you choose, you decide how your money will be invested. You might choose to invest in higher risk options or you may be more interested in lower risk instruments. Whatever you decide, it will make money for you and put you on the path to financial security for your later years.
9. Social Security
Those who expect to retire in twenty or thirty years may not have the luxury of collecting social security benefits to carry them through. It is becoming increasingly necessary for the younger generation to prepare for the fact that government money may not be a possibility for them when they retire.
10. Protection Against Inflation
As the years pass, the cost of living continues to increase. When you have your money working for you, you are building up a defense against the future cost of living. Rather than having to work for all the money you will need in the future, the investments you make will generate a perpetual income that will carry you through.
It is clear that there are many reasons to start saving for your retirement today. Whether you choose to invest in the stock market, real estate, or a 401(k) or Roth IRA, the sooner you get started the easier it will be to live comfortable when you retire.