When 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!
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Last time we covered when you should start thinking about saving for retirement, some statistics that prove starting early will pay huge dividends, and some factors to consider when making your contributions. Today we’re going to look at some financial tools to help you stay on top of your budget on a daily basis.