Whether you're fresh out of college or ten years into the workforce, your first thought about retirement is probably...that it's very far off. That's understandable. Right now you're thinking about your career, perhaps starting a family or buying a house. It's not easy to imagine what your life may be like in your 70s.
But here's the thing: the retirement savings habits you establish now will serve you throughout your career, and putting time on your side by starting early will give you much greater freedom and flexibility later.
Gain Insight into the New World of Retirement
This is not your father's retirement; it won't be your children's either. Retirement – what it means and how we get there – is constantly changing. Understanding today's world gets your retirement journey off to a good start, and keeps you ready for changes on the way.
The Cost of Waiting
Retirement is a great place to be, but it's a long road to get there. Take the first step today! Take Action!
- Start saving today - don't count on tomorrow.
Use as much time as possible to save and invest for retirement.
Every day is an opportunity to build your savings so you can live your retirement dreams.
If you haven't started saving – or if you aren't saving enough - here are some important things to consider:
- People are living longer – Your earning years may not be much longer than your retirement years.
- The level of income you'll need to afford the lifestyle you desire during retirement may well exceed your current living expenses.
- Time is money – The sooner you start saving, the more time your investments will have to grow.
Investing just $300 per month will grow to $787,444 in forty years, assuming an average annual growth rate of 7%. If you put off saving for retirement for even just five years, that number shrinks to $540,316. So that $300 a month that you didn't save for retirement may have afforded you $18,000 worth of small luxuries over those five years, but it leaves you with $247,128 less when you retire. There is no doubt that the cost of waiting is very high.
These investment returns are not the only missed opportunity if you don't start saving now. If you work for a company that matches a portion of your retirement account contributions, waiting also costs you that company contribution and the investment returns on that amount.
And don't forget about the tax advantage of saving for retirement. When you make retirement account contributions on a pre-tax basis, a smaller percentage of each paycheck goes to the IRS. More importantly, your retirement funds won't be subject to taxes until you begin making withdrawals after your retirement party. Since your tax rate is likely to be lower after your employment years, the more you save now, the less income tax you pay in the long run.