Importance of Saving for Retirement Early
5 REASONS WHY YOU NEED TO START PLANNING FOR RETIREMENT EARLY
When you think about your retirement, chances are that it is still a long way off – and this makes it easy to postpone setting up a plan of action. But by the time you reach the age of retirement, it may already be too late.
Taking steps early on can make your golden years more comfortable and enjoyable – not only for you but also for your loved ones.
There are a few key reasons why planning for retirement early is necessary.
1. You have more time to save
One of the best things about starting your retirement planning early is that you have plenty of time to save up. This means that you can afford to contribute smaller amounts on a regular basis, rather than trying to save a large sum of money in a shorter amount of time. Over the years, this will add up and you will be able to enjoy a more comfortable retirement.
Here are some examples of how much it can cost you if you start late.
A 25-year-old worker with a PHP 30,000 monthly salary would have to save 6% of his salary until retirement in order to be able to retire at the age of 60 with PHP 756,000 savings. If he doesn't start saving until he is 35, he has to contribute 8% of his salary every month to achieve the same target. If he doesn't start saving until he is 45, he has to set aside almost 14% of his monthly income.
2. You can take advantage of compound interest
Another reason why it is important to start saving for retirement early is that you can take advantage of compound interest. This means that the money you save will earn interest on top of the interest it has already earned, and this can help your savings to grow even more quickly.
3. You can reduce your stress levels
One of the biggest challenges retirees face is dealing with a reduced income. But by starting to save for retirement early, you can reduce this stress. This is because some of your investments will have had the chance to grow, meaning that your income will be higher than it would otherwise have been.
4. You can avoid debt
Another common issue for retirees is debt. This can be difficult to manage on a reduced income, but it can be avoided altogether if you start saving for retirement early on. This is because you will have had plenty of time to build up a savings cushion, which can help you to cover your costs in retirement.
5. You can help your loved ones
Finally, one of the best reasons to start your retirement planning early is that you can help to secure a meaningful inheritance for your loved ones. This means that they will be able to benefit from some of the money you have saved while ensuring that your own needs will be taken care of in your old age.
Saving for retirement may seem like a daunting task, but by starting early you can make it much easier on yourself. There are plenty of ways to save, so find one that best suits your needs and get started today!