It’s never too early to start saving for retirement.
The earlier you start, the easier it will be. Whether you have a few years or a few decades until retirement, putting aside even a few dollars today will get you more money in retirement than if you put off contributions until next year.
Want to see what we mean? Keep reading.
You might think that retirement planning is something you can save for later in your career—or, you know, next year, at the very earliest.
Here’s a fact that’s a little stressful but can also be exciting: No matter your age, whether you're fresh out of college or well into your career, your retirement savings clock is ticking. We can’t overemphasize the power of starting to invest early.
Why? Two words: compound interest. The earlier you start saving, the more time your money has to grow. Picture a snowball rolling down a hill, and you’ll get the gist. If you want a big snowball, you want that hill to be as tall as possible.
In other words, saving a little bit today will yield you more returns than saving a little more tomorrow. If you’re able to set aside a few dollars right now, it’s worth learning about your options.
Whether you’ve got 40 years until retirement or you’re hoping to retire in just a handful of years, it’ll pay to start saving today.
If you’re in your 20s or 30s, good news: Starting now means you’ll need to save less overall. Investing $100 now will get you thousands of dollars by the time you need that money in retirement.
If you’re in your 40s, 50s, or even your 60s and you’re feeling a bit behind the game, don’t worry. You just need to approach retirement saving with a more aggressive strategy. If you're beginning later, consider making higher contributions, if possible, or selecting more aggressive investments to bridge the time gap.
Regardless of the amount of time you have, the real secret to retirement savings success is consistency. Let’s take a look at exactly what consistency can get you with some hypothetical projections:
Clearly, starting to invest early is a good idea. But it’s not the only thing that ensures a great experience in retirement. For your retirement planning to be truly strategic, you need to have a specific goal in mind.
We often hear people asking, “How long will my retirement last?” and it’s a good question.
The answer depends partly on the type of lifestyle you want in retirement.
If you’re planning on a relatively quiet retirement, living in your family home with just a quick trip here and there, and you’re in good health, then you may be able to stretch your retirement fund pretty far.
If, on the other hand, your dream retirement features swoonworthy trips every year (and why shouldn’t it?), you’ll need a slightly heftier nest egg to fund your retirement.
It’s worth thinking about. When you start saving for retirement, consider what you want to do in retirement, and let that dream guide your savings goals.
Once you’ve determined how much you would like to save overall, it’s time to figure out how much you need to set aside each month.
The answer will be specific to your circumstances and goals. (We’ve also got a handy compound interest calculator that can help you answer this question in seconds.)
A good general goal to aim for is to save 10-15% of your pretax income for retirement. If you’re working with a little less time or have ambitious retirement goals, your percentage may be higher. Remember, though, if you’re not able to save that much, that’s OK. Anything you can save right now is better than nothing and will get you further than the same amount invested a few years down the road.
Your route to maximizing retirement savings will require a blend of strategic investments and smart decisions, including, for example:
Aside from these tips, remember to always stay informed about savings strategies so you can review your retirement plan and adjust as needed.
Saving for retirement early can help you build a comfortable future. Interested in learning more about your options and when you should start saving for retirement? At iQ Credit Union, we’re happy to offer a range of investment products to help you build your retirement nest egg starting today, such as easy-access, high-value savings accounts and investment services for every stage of your life.
Interested in learning how to wield these financial tools well? Download our free e-book, Retirement Strategies: Building a Successful and Secure Retirement, to learn more.