If you are in your twenties or thirties, retirement is probably the last thing that’s on your mind. You would probably be busy thinking about a career boost, a new home, or starting a family. The thing young people don’t realise is that retirement is a major life event, just like all the ones mentioned. Retirement indicates that you have finally reached your elderly years, and it’s time to let go of everyday worries and relax.
Retirement does not indicate an end to life as you know it. Statistically speaking, you will live for two or three decades after retiring. During this time, you will need shelter and money for daily necessities. Now, whatever the government or your children might offer may not be enough. If you want to retire comfortably, you will need a plan. Also, you need to set this plan in motion just as you send out your 40th birthday invitations, if not earlier. Here are some of the reasons why you should do so:
Savings Take Time
If you start saving five years before retirement, you will never have enough funds to cover living as you like for over a decade. The earlier you start to save, the more money you will have to cover your basic necessities, plus any indulgences once you retire. If you start saving a decade or more earlier, you can earn a hefty sum just from the interest generated by your savings.
It’s understandable that most young people don’t want to set up a retirement fund, what with having to pay off mortgages, student loans and all. Remember that after you retire, you will no longer be eligible for personal loans to get you out of a financial bind. Therefore, it is of utmost importance to make sure that you have adequate funds to survive through your later years. Do not rely on the children or the government. Policies change, and your children will have money troubles of their own to worry about. Therefore, start saving today little by little for retirement.
Investments Don’t Build Up Instantly
Like savings, investments generate profits over time. You should never plan to invest primarily after retirement. You can continue to invest after retirement if you have enough funds, but you should ideally invest money while you are still young. When you start early, you have time to learn the ins and outs of investing. You can familiarise yourself with the markets, and diversify your portfolio to minimise the loss from vulnerable investments. More importantly, if an investment fails, you will be able to work a second or a third job to cover the loss. You won’t be afforded the same benefits when you are older. Therefore, if you plan to invest, now is the time, not when you are sixty.
Debts Needs Settling
Settling existing debts should be one of the top priorities alongside saving and investing for retirement. If you don’t plan early, you risk defaulting on some of your debts. Imagine being over fifty five; would you want creditors to show up at your door and foreclose your home? If not, make financial arrangements today to pay off debt.
Retirement is not something that should be taken lightly. Do not plan to depend financially on someone else when you are older. Be as financially secure as you were in your heyday, and your later years will be as happy as they should be.