Saving for Retirement

If you have read any of my other blogs, you might have noticed that I like to write about things I wish I had done differently. It isn’t because I think I’ve made a lot of financial mistakes in my life, but there are some opportunities that I wish I took advantage of sooner. I want people who read my blogs to learn from these missed opportunities.

One thing I wish I had done sooner is starting to save for retirement.

I started saving in a 401(k) as soon as I was eligible to do so at my current job, which was about two years ago. I was 23 years old, which isn’t too late into adulthood to start saving. After all, some people do not have a job right out of college and do not get the opportunity to start putting money aside. I feel like I might be ahead of the game in that aspect. However, I could have started saving in a 401(k) 5 years earlier when I worked at another company part-time through college. Part of the reason I didn’t start then was because I was a huge procrastinator. I figured I would do it “at some point”, but now I see ignoring those pamphlets for 5 years was a too much procrastinating.  What was I waiting for? Another reason I didn’t start right away was because I wanted and needed all of the money I was making for school and more other things. I was 18, can you blame me for wanting to spend my hard earned money?

Starting to save as soon as possible can make a very sizeable difference from waiting until later. Your earned interest will begin to earn even more interest over the years, (this is known as compounding interest) and that really adds up! Here’s a great example from a CNN Money article that I came across:

“Here’s an example of what a big difference starting young can make. Say you start at age 25, and put aside $3,000 a year in a tax-deferred retirement account for 10 years – and then you stop saving – completely. By the time you reach 65, your $30,000 investment will have grown to more than $338,000, (assuming a 7% annual return), even though you didn’t contribute a dime beyond age 35.

Now let’s say you put off saving until you turn 35, and then save $3,000 a year for 30 years. By the time you reach 65, you will have set aside $90,000 of your own money, but it will grow to only about $303,000, assuming the same 7% annual return. That’s a huge difference.”

I also think about how I want to enjoy myself when I am retired. You often hear about retired family and friends taking fun trips, buying something they had always wanted, and spoiling their grandkids. I want to be like that too! Hopefully I am on the right track to living comfortably when I am retired.

A great piece of advice I heard from a friend and coworker was to contribute a little more to your retirement savings any time you get a raise at work. That way, it isn’t money that you feel like you’re missing, because you weren’t used to having it in the first place. This has worked out for me in the past year or so, and has also helped me budget a little better by keeping the same income.

Now you probably understand why people say start saving as soon as possible. Do some research on your options and what you can afford to put away right now for the future. You will thank yourself later!

Comments

Your email address will not be published. Required fields are marked *