Retirement may seem like a distant dream, but the earlier you start saving, the better off you’ll be when you stop working. While there’s no perfect answer for when to begin saving for retirement, the sooner the better. Time is on your side when you start young, allowing you to take advantage of the power of compounding and the power of tax-deferred growth. Here are some reasons why you should start saving for retirement now:
You have more time to save: The biggest benefit of starting to save early is that you’re giving yourself more time to accumulate wealth. You can literally watch your savings grow over time, which is great motivation to stay the course. Plus, if you start early, you’ll have the opportunity to take advantage of compounding, where the interest you earn on your investments is reinvested, earning even more interest.
You’re taking advantage of tax-deferred growth: If you’re investing in a retirement savings account, such as a 401(k) or IRA, your money will grow on a tax-deferred basis. That means you won’t pay taxes on your investment gains until you withdraw the money, which could be decades down the line.
You can take advantage of employer matching: Many employers offer a 401(k) match program, where they will match your contributions up to a certain percentage. This is essentially free money that is helping you save for your retirement.
You’ll be better prepared for unexpected expenses: If you start saving early, you’ll have a financial cushion to turn to if you ever face unexpected expenses, such as medical bills or job loss.
You’ll have more money to enjoy in retirement: The sooner you start saving, the more money you’ll have when you retire. You’ll have more money to enjoy retirement, travel, and do whatever you want.
You’ll be better prepared for inflation: Over time, inflation erodes the purchasing power of your money. If you start saving early, you’ll have more money to combat inflation and make sure that your money goes as far as possible in your retirement years.
Retirement can seem like a distant dream, but the earlier you start saving, the more prepared you’ll be when the time comes. So, don’t wait. Start saving for retirement now and secure your future.