5 Reasons Why You Need To Start Saving For Retirement Right Now
Stop whatever you’re doing and go grab a dollar. If you’re like me and never carry cash, open up your online banking account and click on the button that says, “Transfer Money.”
Right now, together, we’re going to start saving for retirement. Put that dollar in a jar somewhere and make that your official retirement fund until you can actually go put it in a 401k. Same goes with the online transfer. Transfer that dollar into a savings account and make it your goal to start a legit retirement account.
I’ve been saving for retirement since I was 18 years old. Does that make me sound like a nerd? Maybe a little bit, but it also makes me a 26 year old with over $60k+ saved for retirement, one of my proudest accomplishments to date.
I had a lot of good advisors teaching me the financial ropes from a really young age, so now it’s my turn to share some advice with you. For those of you who think you have “plenty of time” to worry about saving money, here are five good reasons why you should start saving for retirement now.
1. So You Don’t Have To Work Forever
I think it goes without saying, but I’m sure you don’t want to work forever. I’m sure you don’t want to be 80 years old working at Walmart because you need to pay the bills. But the reality is that so many people are working way past the typical retirement age because they simply can’t afford to stop working. So the sooner you start saving, the earlier you’ll be able to retire, and I don’t know about you, but the sooner I can relax and travel the country in my future RV, the better!
2. Because You Shouldn’t Count On Government Help
Most people these days get a nice little check in the mail when they retire. They get social security and Medicare because they paid all these taxes their whole lives and now they’re getting their end of the deal. But you know what sucks? Most of us millennials will probably never see those checks. The way things are going, it doesn’t seem that the government will be able to support us when we retire, so you ought to prepare yourself for that worst-case scenario.
3. So You Can Take Advantage Of Compound Interest
Compound interest is a beautiful beautiful thing. I’m not a fancy finance person, but compound interest basically means that the earlier you start saving money, the more money you’ll have down the road. As time goes by, you’ll earn interest on the money you put away, and every year that interest will be added to your initial investment – kind of like a giant snowball that keeps rolling around and getting bigger. Still a little confused? Google it. It’s amazing.
Here’s a quick scenario for you:
“If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for three decades instead, and earnings grow at 8 percent a year. When you’re 65 you’ll wind up with around $245,000 — less than half the money.”
AKA, go save now.
4. Because It’s Easier To Get Used To Living On Less Early On
When your bills are smaller and you have fewer responsibilities, it’s easier to put more money away. If you start getting used to the fact that a certain percentage of your check goes straight to your retirement account each month, it’s money that you don’t even see, and you get used to not having it. I say that based on experience because that’s exactly what happened to me.
I set up my retirement account to automatically deduct a certain percentage of my paychecks, and while my paychecks were smaller than what they could have been, I learned to live within my means. 5 years later, I realized I was contributing about $800 a month to my retirement account, but it was money that I didn’t count on to pay the bills or to shop. Basically, I hid my money from myself and it was the best financial decision I could have ever made.
5. To Take Advantage of Tax Benefits
This one’s pretty easy because who actually likes paying taxes? If you start saving for retirement, the money you put into your traditional 401k retirement account isn’t taxed until you withdraw it when you retire. The logic here is that you’ll typically be in a lower tax bracket when you retire, so it makes sense to defer paying taxes on that money until later.
So there you have it! 5 very solid reasons why you ought to start saving for retirement right now.
What do you guys think? Does that make sense? And tell me, how many of you have already started saving? Props to anyone who’s managed to save even $1.
This post was written as part of the Allstate Influencer Program and sponsored by Allstate. As always, all thoughts and opinions are my own. As the nation’s largest publicly held personal lines insurer, Allstate is dedicated not only to protecting what matters most–but to guiding people to live the Good Life, every day.
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