You have your degree and a fresh start at the world. You may be looking around at all the things that life has to offer you. Wow, better get busy! But hold off on a shopping spree. You need to think about the future. Time goes by so quickly and taking full advantage of it will pay off big time. The earlier you start saving, the more you will have. You are 30 years from retirement. In 30 years, savings will compound and grow dramatically. For just a couple hundred dollars a month, you could be looking at retiring early and comfortably. Only 31% of workers under 25 contribute to their company's 401(k) plan. Sixty-three percent of those between 26 and 41 contribute, while 72% of those 42 and older contribute. If you wait until you are 42, you'll be playing catch up. You will have to sacrifice more money out of your monthly paycheck just to be able to retire. Here are a few wake up calls. If you are under 25, there are some assumptions that you can simply throw out the window. 1. You can kiss a monthly pension at retirement good-bye. These don't happen much anymore. They are actually practically extinct for new hires. Don't count on anything but your savings. 2. There's always time later. The more time goes by, the more you have to put in savings. If you start at 20, by the time you are 40, you can save $100,000 by putting $3,272 a year towards an investment with a 4% annual return. If you wait until 30, you'll need to save $6,559 a year at 8% to see that $100,000 goal. 3. That's what Social Security is for. I wouldn't count on it... Yes, there are a lot of things that you need when you are starting out. There are housing costs, student loans, credit cards and car loans. This can often eat up your paycheck. But so do new clothes, iPods, new cars, eating out and other luxuries. One of the best ways to save is through automatic withdrawals. When things come automatically out of your paycheck or checking account, they become very simple. You never actually see the money -- you aren't tempted to spend it. It is actually the simplest way to save. After a while, you forget about it. Then one day, you are surprised to see how much you have saved up. Retirement isn't as far away as you think. One day, you are just out in the real world. The next, you have a spouse and children. The next, you are ready to retire. Don't let it get away from you. Make it a goal to start saving right now. Think of it as a way to retire early. If you make the right decisions, you might be able to retire at 55. Or 50. Wouldn't that be great? The more you save, the less time you will spend working. Saving for retirement, working to eliminate debt and making wise spending decisions will make your new life in the real world a good one. Start early, save big and live free. |
