Are you still questioning why you agreed to have monthly automatic withdrawals taken from your paycheck and deposited into a retirement plan? Are you thinking about all the things you could be buying with the money going into that retirement plan? If you are then you need a quick refresher on your retirement investing ABC’s.
If the only reason you agreed to invest in a retirement plan is because your boss rattled off something about health insurance, vacation time and the company retirement plan while handing you some paperwork to fill out, you may be doubting your decision making abilities. Because the way you see it, retirement investing if for older people, certainly not you. You are too young to be thinking about retirement investing, right? Wrong! Never, ever think that you are too young for retirement investing. You are never too young to secure your retirement.
Your Retirement Investing ABC’s
A – Why Are You Investing For Retirement?
You are the #1 reason for investing into a retirement plan. Yes it can be a struggle to find extra money to invest for some abstract day which is a long time from now. If you just started your career it is still exciting and new, so why would you be thinking about retiring from it? Well, if the day ever comes when your work has become old and boring, wouldn’t you prefer to have the option of continuing to work or to quit? Working because you want to is much easier than working because you have to.
It may be a long way off and you may not think so right now, but, there will come a day when you will not be collecting a paycheck anymore (it’s call retirement). When that day comes, the only money you will have to live on will be the money you invested right now during your working years. If you have enough investment money you get to call the play. You can quit working and retire on your own terms or continue working on your own terms, it’s your choice. However, if you do not have enough money to support yourself, guess what, your creditors get to call the play…they want their money.
So for your own benefit you should make retirement investing a financial priority. If you can, try to max-out your retirement plan contributions every year. Rearrange your finances, spend less, go on a budget…do whatever it takes to find extra money to invest into your retirement plan. If you cannot afford the maximum contribution, that’s okay, at least contribute some amount of money to your retirement plan; it all adds up. Making retirement investing a priority during your working years will be one decision you will not regret once you reach your retirement years.
B – When Is The Absolute Best Time To Start Investing For Retirement?
Yesterday was the best time to start investing for your retirement; today is the second best time. The reality is that your retirement years could last for 25 to 30 years. Therefore, that is how long your money will have to last. That’s a long time. Another reality, it will take you about 40 years of working and saving to accumulate enough money to last 25 to 30 years. That task sounds daunting, but fear not, it is possible to attain. Others have done it and so can you.
Time is money
The more time your money is invested in the market, the bigger that pot of money will become, due to compounding. The longer you take to think about investing, the more time your money will be out of the market growing. Thanks to the power of compounding interest, if you start investing at an early age, you will need to invest less money overall to reach your retirement goals. Think about it. Wouldn’t you rather invest less money to achieve the same financial goal as someone who has to invest more money? Don’t wait, start investing today.
C – No Worries, Social Security’s Got You Covered, Right?
You are always better off relying upon yourself to support your future; not some government program, like social security. Besides, by the time you reach retirement age, social security may no longer exist. Since we are living longer, people are spending more time in their retirement years. This longer longevity of today’s work force is increasing the number of people using the social security system. The average life expectancy when social security first started was 62; today it is mid 80’s. Avoiding a breakdown of the social security system is nearly impossible; it’s already happening.
Do You Have A Plan B?
If your plan is to rely upon a broken social security system which is unlikely to be repaired anytime soon, you need another plan. Otherwise when it is your turn to retire you will not be able to afford to retire. So even though your family and friends are retiring if you did not save money during your working years it sounds like your only option may be to keep working. Don’t delay, start investing for your future.
You Will Pay Now Or You Will Pay Later
A new career may be a bit overwhelming but still exciting. An old career is the exact opposite. Regardless of where your career takes you though, you will never regret taking the time and making the effort to understand retirement investing. Ask people who are nearing retirement age and are unable to afford to retire due to financial reasons how they feel about retirement investing. Most will tell you that when they were young they did not think that retirement investing was important. And they regret that decision. So do yourself a favor, do not allow yourself to disregard the urgency of investing into a retirement plan. If you do not prepare for your own retirement years, who will? No one cares about your retirement more than you do.
Take full advantage of today. If you plan on being the one to make the decision on when you exit the work force (retire), you need to take full control of your financial life. And today is the best time to do that. You either pay now or pay later. Paying now means to make some financial sacrifices to find extra money to invest. Paying later means not having enough retirement investments to afford retirement, which forces you to stay in the work force a lot longer. You make the choice.