Time is money. The sooner you get to saving, the longer you have to compound. In The Washington Post, Michelle Singletary discusses five reasons to start saving early. She writes:
It’s been a year since my youngest daughter started her first full-time job, and she still hasn’t signed up for her workplace retirement account.
It’s not that she doesn’t want to save. It’s just that her entry-level salary as a kindergarten teacher isn’t very high compared with her peers in technology and other STEM fields. She also complains that 7 percent of her pay already is being deducted for the pension system for public workers.
Although our daughter lives at home because of the high cost of rent in our area, seeing so much of her pay going into an account she won’t — or shouldn’t — touch for decades is a hard sell.
For young adults with major financial obligations — student debt, rent, an auto loan — investing for retirement may not seem like a realistic add-on.
But as my husband and I have repeatedly pointed out to our daughter, her pension may not be enough since it’s determined by a formula based on her years of experience and final salary. And who knows what the rules will be for Social Security by the time she can collect benefits?
So, we keep pressing her to start saving for retirement in her 20s. Here are five reasons she should start now.
The five reasons Singletary lists are:
- Retirement savings may not be as big a hit to your wallet as you think.
- The power of compounding is a tremendous force.
- Get the hurt over now.
- Inflation is one of retirement’s biggest risks.
- Social Security changes are coming.
Action Line: Saving should begin as early as possible. If you know a young person who needs to get started with saving, download my free Special Report: How To Invest After Graduating College today and give them a copy.
E.J. Smith - Your Survival Guy
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