It pays big to think about retirement now rather than later, and here’s why:
Let’s say your buddy begins saving for retirement at age 23 with just $100 a month until he’s 60. The total amount he will have saved is $44,400. But with a 10 percent average rate of return, the total amount he will have accumulated by age 60 is $465,983.
You decide to wait to start saving until you’re 30 years old. You also plan to save $100 until age 60. The total amount you’d save is $36,000. With that same 10 percent average rate of return, you’re looking at just $226,049. Not accounting for additional contributions or adjustment for inflation, your friend will come out $239,934 ahead of you at the age of 60. The cost of waiting until you’re 30 to start saving means you’d receive less than half of what your friend would receive because he started in his 20s.
It doesn’t take much to start saving. Begin by investing 10-15 percent of your income. If that’s too much for your budget, begin with $50 a month.
If your employer offers a 401(k) plan, sign up—it offers a consistent and automatic way to save. In addition to elective deferrals you make, your employer may also offer matching contributions up to a certain percentage. That’s FREE money to grow your retirement savings even faster.
You also might consider an IHMVCU individual retirement account (IRA). There are two types of IRAs: the Roth IRA and the traditional IRA. Each option offers certain tax benefits.
Learn more about IRA and investment options with IHMVCU.
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