Unless you're well into your working years, chances are retirement isn't something at the forefront of your mind. You've got other things to worry about—your living situation, your transportation, maybe a family, and leisure. All of these are important expenses, but it doesn't mean you can forget about retirement until you're much older. Saving for the end of your career is crucial. Wondering when to start saving for retirement? We'll explain it all here.
When to Start Saving for Retirement
The short answer? Start saving as soon as you can. For many, this will be your first job where you are financially independent and stable—probably in your early-to-mid 20s. But, again, you're probably not thinking too much about retirement if you're in this age bracket. For you, we have some tips and advice . . .
Interest plays a huge role in your retirement savings.
The principle in starting early is simple: the earlier you begin saving, the more time your savings have to grow and accrue interest. That said, it's better to start saving sooner, even if you're saving just a little bit each paycheck. And, as we'll discuss, there are certain tax-free retirement plans that will compound your savings even more.
Don't pass on that 401(k).
If you're unfamiliar, a
401(k) is a savings tool most major companies offer their employees. Based on your income and expenses, you work with your employer to choose how much of your paycheck you'll invest in the 401(k), and your employer will match your contribution up to a certain percent. So, if your employer offers a 401(k) to their employees, you'd be passing on free money for your retirement by opting out. Additionally, the money you put into a 401(k) is excluded from taxable income—another perk for you.
Put your savings in a separate account.
Saving your funds in one of your everyday savings accounts will 1) tempt you to use the funds, and 2) not give you an accurate idea of how much money is for now and how much is for down the road. Many financial institutions offer an
individual retirement account, or IRA, that allows you to save for retirement with tax-exempt growth.
Resist the excuses for not saving.
We know there are many other things 20-somethings would rather spend their income on than retirement planning, and sometimes, those just starting out may not be able to spare much for saving. Our advice is simple: contribute what you can. Even if it's just a tiny percentage of your paycheck, anything is better than nothing—you'll still accrue interest throughout the years and might even surprise yourself with what your savings turn into. And if you're really struggling with your budget, your financial institution can help you sort things out.
Still need advice on when to start saving for retirement? Ask your credit union or bank! They will be more than happy to help you.
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Are you interested in joining a credit union? If you live or work in southwest Missouri, check out
BluCurrent Credit Union. With our unbeatable loan options, 6,800 shared branches across the country, and fantastic customer service, we might be the perfect financial service for you—and we'd love to help you start saving for retirement. We have three locations, and we also offer online and mobile banking for your convenience. Plus, we provide nationwide ATM fee refunds with our checking accounts! To learn more about our services and benefits, please stop by one of our branches.
