Published on April 24th, 2018 | by Jones0
Reasons to start saving for retirement the minute you land your first job
No matter your age and financial status, saving doesn’t come easy. And, while ‘age’ might just be a number, over time it catches up with you. When you’re young and free of responsibilities, this is the time when you should start preparing for a comfortable life as a retiree. You’ll thank your future self.
With uncertain, ever-changing living conditions becoming the norm, it’s important to derail from splurging your entire monthly paycheque and put some money aside for a rainy day, including retirement. While it might seem like that’s a distant thought in the interim, with various other things like entertainment, property, wedding planning or more, to spend your money on, you don’t want to get to the end of your working days and discover that you simply cannot afford to live comfortably. If you try and save a percentage of your salary every month, you’ll give yourself more room to breathe when it matters most.
Here are a few reasons why you should start planning for retirement:
- You don’t want to have to rely on your children
Retirement is not as affordable as you’d expect. If you were to get chronically sick, the frail care rates and general retirement home rent is huge. With saying that, you cannot simply rely on your children (if you have any) to assist. Much like you, your children will also run the risk of sudden job loss, medical emergencies and more. In dire circumstances, you might need to support them in your old age, so make sure you have the money to do so. Retirement is about you and your ability to live a comfortable life on the money you’ve saved over the years. Financial challenges are around every corner, so prepare yourself for the good and bad by planning ahead and saving from the minute you land your first job.
- You’ll learn about money management skills
While it might not feel like it, starting your first job is a massive responsibility. Usually, the freedom becomes less as you start to pay more bills. Now that you’re out on your own, you need to start taking responsibility for your finances one step at a time. You need to learn how to manage your money, and part of developing this type of responsibility is by saving and setting goals.
Once you learn how to balance your budget, it’ll become easier for you to pursue your financial goals and plan for a better future. At the end of the day, it’s easier to create habits and save when you’re young, because the older you get, the more dependents you have and the more challenging your responsibilities are. If you have a routine from the start, you’ll be able to stick to it for years to come.
- Pension plans are few and far between
The traditional pension plan is disappearing quickly and companies are becoming reluctant to offer pension funds. Within saying that, if you are offered a plan at your company, the chances of it being generous are poor. And, if not, it’s up to you to invest in your own retirement annuity. Do your research and look at all your options as many offer you the ability to save on tax efficiently and achieve the best possible income. On another note, people are starting to live longer, so it’s difficult to assume that a traditional fund will last you the additional years of your life. Make a plan today for tomorrow.
- Compound interest is key
The benefit of saving from a young age is time. As mentioned, when you’re young with little responsibilities or dependants, you’ll be able to build up a large amount of savings using the power of compound interest. Putting money aside for years will give your money time to grow, allowing you to save less. You’ll be surprised at how much your insignificant debit order will grow in 40 years. It’s highly recommended to get into the groove of saving and putting away money for both retirement and for luxuries. When you start saving young, you won’t have to stretch your budget when future obligations arise.
Whether you’ve landed your dream job or you’re working three to pay the bills, it all comes down to how much you can save. Success is measured by your savings, so the earlier start, the better your future will be. Not just for retirement saving purposes, but to lead a better life. Life is unpredictable and you never know when your vehicle is going to need a new clutch, so make sure you have the money to get yourself out of these sticky situations. Most people only start saving their money after the age of 25 because they’re still enjoying the perks of earning a salary. Don’t leave your piggy bank empty for years before it’s too late. If you don’t save in your early years, you might find yourself in debt. But, without the Prescription Act and professional guidance, you’ll be protected from unscrupulous credit providers.