Great Retirement Advice, Are You Listening?

Young People Get All The Breaks

  • Age 20-something | Still time to retire millionaires.

When you are in your 20’s you are in the absolute best financial position that you will ever be in.   You may not completely comprehend that yet, but when you are in your 50’s you will.   Don’t wait until then to get it, get it now and save  yourself a lot of stress.

  • Not there yet, you will be

You may ignore all retirement planning advice because you aren’t exactly at the point in your lives where you are even thinking about retiring…after all that’s what “old people” do.

Stop that kind of thinking.  The financial decisions you make right now in your 20’s and even 30’s will affect your entire financial future.  And guess what, some day you will be one of those “old people” ready to retire…don’t you want to be financially ready?

The Value Of Time

  • Time is on your side|you have so much of it

You are in the best financial position of your life because of your time.   If you want to gain financial traction that will last the rest of your life take advantage of your time.

You have decades before you retire so you have decades to save for you retirement.  The more time your investments are in the market growing, the less money you will have to contribute overall.

Since you are starting your career you many not earn a lot of money, that’s okay, you can still invest some of it if you manage your spending.   You have time on your side so the amount of your investments can be smaller.

Your Financial To-Do List

  • If your employer offers a retirement plan, start your contributions immediately, you will not miss the money.   You do not have to invest large amounts of money; since you have the advantage of time, your contributions can be small.
  • If your employer does not offer a retirement plan, open a Roth IRA at a bank or an insurance company.   Your contributions are not tax-deductible, but that’s okay because your money will be in the market growing for a very long time.

The Value of Compounding Interest

Plan your retirement while still young

Image by louisa_catlover via Flickr

As a new investor you may not understand the true value of compounding interest; but you should because compounding is powerful.

Compounding makes your money earn money with little effort on your part.   How can you beat that??   You can’t!!   The effect that compounding has on your investments should be a strong enough motivator to get you to start your retirement plan contributions at work or to open an IRA.

How Compounding Works

The way compounding works is that your money earns interest on the interest and then that interest earns additional interest and so on and so on.  Money earning money, that’s power.

Compounding works the best when your money has a lot of time in the market.  The effect is that you have to invest less amounts of money long-term.

Compounding Is Slow|You Need To Work It

Keep in mind that the real impact of compounding on your investments occurs over time.

You won’t see your investments explode over night; investments take time to grow, they don’t grow quickly at the beginning, work with it.   Do not get discouraged by the delayed growth your investments experience.

Compounding interest is not an instant gratification “lift”.   But that’s okay, you have plenty of time for investment growth.

You Can Do It

Keep investing and  stay the course, you will not regret it when you reach retirement age.   Do not get beaten down by negative chatter from the media, your co-workers or your family and friends; you are on a financial mission, and you have the wherewithal to stay on track.