If you’re in your 20’s retirement may be the last thing on your mind. But I’m going to tell you why you should make saving for retirement a priority while you’re in your 20’s. Read on for some advice on why you should start saving while you’re young.
When you add money into a retirement account it will earn interest. Not only that, but the interest you earn goes right back into the account. So the next month you will earn interest not just on the principal, but on the interest as well. So you’re earning interest on the interest.
If you start saving for retirement at a young age you can double, triple and even quadruple your money. If you start saving for retirement in your 50’s you won’t earn hardly as much interest. There’s many savings calculators you can use online to see just how much your money can grow if you start investing early.
By the time you retire you may have to look up the term Social Security to even know what it is. According to most experts, by the time you retire sometime in the 2050’s you will not receive your full retirement benefits, if any at all. Even if you’ve paid into the system your whole life you still may not get what you deserve. In fact, the social security taxes you’re paying now are being given to current retirees. That sounds like a ponzi scheme to me.
Rather than relying on the government to take your money, save it for you, then give it back to you once you retire, do it yourself and sign up for a retirement plan at work. Your human resources department should be able to point you in the right direction as far as how to sign up, what plan to sign up for and how much to deposit from every check.
If you were born before 1937 you can retire when you hit 65 years old. But if you were born after 1960 you’ll have to wait until you’re 67 to receive your full benefits. Well, if you’re in your 20’s you were born in the 1990’s. Who knows, you might need to be 72 to retire by the time it’s your turn.
That’s why it’s important to not rely on social security and have your own 401k or Roth IRA retirement account. This way, if you have saved enough and want to retire at 65 you can do so. Imagine if your health is failing already and you’ll still have to work another 7 years because you relied on social security.
If you think you can manage on a couple grand a month when you retire, think again. Right now you might be able to do it, but because of inflation, you will need $4,000 a month in the future just to make ends meet. As time goes on, the value of a dollar decreases as the price of gas, food, clothing and shelter increase.
This is why it is imperative that you combat inflation by saving your money and having it earn interest. That way, if you earn a 7% return in a year and the rate of inflation is 4% you still come out ahead.