The moment you walk through the front door, your phone rings. You answer it eagerly, speaking with the job interviewer that you just saw an hour ago. They excitedly give you the good news as you can barely hold back the scream of joy. You landed your first job and will start work on Monday. When you go to bed, you think of the things you want to do and buy with your new salary.
Time to Think About Retirement
While thoughts of buying those special luxuries you desire to fit into your particular lifestyle may be paramount in your mind, you should also consider starting a retirement fund. It’s true that you are still in the early stages of your life. Also, you may have other debts, such as student loans, to pay off first so you can gain greater control of your financial situation. Besides, you assume that there are still programs such as Social Security that you pay into, which will go toward your future retirement.
Unfortunately, you cannot assume that retirement programs your parents have today will be available when you retire. In addition, the number of benefits you receive may be less than what you expected.
The moment you get your first job during your 20s, you need to consider what you can save now for your retirement. By saving now, you can be reassured that you will have the funds you need when you retire.
Start Saving Less – More Often
One of the best reasons to start saving early is that you can save less money which will build more interest over a longer period of time. If you wait until you reach age 50 to start saving, you will only have 10 to 15 years to save up for retirement, and you have to save larger sums of money.
For example, assume you are 25 years old, and you open an account with $500 that earns 3% APY. If you deposit $250 each month into that account for 40 years, you’d have over $230,000 by the time you retire at 65.
Now let’s assume you didn’t save during your younger years. Now you’re 50 years old and plan to retire in 15 years. Earning the same 3% APY, you would have to save roughly $1,012 per month (over $12,000 a year) to reach that same $230,000 retirement savings. It’s a lot easier to save $250 per month ($3,000 a year) for 40 years to reach $230,000 versus saving over $12,000 a year for 15 years; especially since you may be helping your own children around this time with their finances or have other unexpected expenses.
Have the Money You Need for Your Retirement
Every person has different retirement money goals based on their desired standard of living. Starting early with the right retirement account will give you an advantage in saving versus starting later in life.
Even if you are in your 30s or 40s, you should still consider saving up for your retirement now. You never know what the future holds, so it’s important to save for retirement while you can.
We’re Here to Help!
If you’re ready to begin exploring options to save for your retirement, we’re here to help. Please contact us or stop by any of our convenient branch locations. We’ll sit down with you one-on-one to find the right account and plan that works for you.
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Each individual’s financial situation is unique. We encourage you to contact United Texas Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.