Achieving a Stress Free Retirement, the basics

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Happy Senior Couple on the Bow of a Sail BoatWhen should you start planning and saving for retirement?  Truthfully there is no exact answer to this question, but believe it or not, it’s a good time to start when you land your first job out of college.  Developing good spending and saving habits, and learning to budget and invest while you’re young will help you avoid unnecessary debt and reap the rewards in your financial future.  It’s kind of like brushing your teeth… you start young brushing your baby teeth so that when you’re older you’ve developed good habits for your adult teeth. This way your teeth won’t all FALL OUT and you won’t be living on the street when you’re 75!

You’re never too young to start saving, but keep in mind that as you age, the cost of saving increases with each passing year.  According to Money Magazine’s “Ultimate Guide to Retirement”, a 25 year old who sets aside $3,000 per year for 10 years and never contributes another dime will have more than $472,000 at retirement (assuming an 8% return)!! A person who doesn’t start contributing until the age of 35 who sets aside $3,000 a year for 30 years will only have that money grow to about $367,000. In a nutshell, Saving for only 10 years when you’re 25 will get you MORE than saving for 30 years if you start just 10 years later! WOW! The benefits of starting young are clear, but you’re never too old to start!

We’ve seen what saving at a young age can do for your investment earning potential, but are you saving enough for retirement?  You very well may be, but many people miscalculate how much they will actually need in their golden years.  Make sure you consider all of the following when deciding how much to save each month/year:

  • Inflation
  • Recession or fluctuations in the market
  • Outliving your expectations and savings account

It’s essential for you to know your financial risks and use budgeting tools.  You might even want to consider employing a reputable financial advisor who can guide you through all of the potential bumps in the road.  Next time we’ll take a look at some of the best financial tools available to you.

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