You still have a few years, plenty of time to save for your retirement, right? Wrong. Retirement savings are much more important than many people give them credit for and starting your savings early will reduce the stress you feel as that magical number inches closer and closer. Because it is such an important task, planning for retirement can be extremely daunting. But by knowing exactly what you need to save and by starting early you will be well prepared for your golden years.
Saving early in life is beneficial for many reasons. It gets you into the habit of thinking about your future and doing what you can to prepare for it. Retirement can be a large financial burden, and allowing yourself to plan early will ease its weight and allow you to enjoy it, rather than worry over its funding.
Early savings also means more savings because it gives your money more time to make money. The earlier you start earning interest on your savings the more money you will accrue over the years. This is like an intrinsic reward for planning at a young age and a significant amount of interest can be a truly beneficial support to your growing nest egg. Additionally, some retirement planning tools, such as a 401(k), are tax-exempt. The set amount of money you contribute each month to your 401(k) is withdrawn from your paycheck before taxes are calculated, allowing you to keep 100% of the money you save. Each savings tool offers unique benefits and it is important that you have guidance when choosing which tools will work best for your savings goals.
Many tools are available to help you initiate your retirement planning, and a financial advisor is the best resource out there. A great financial advisor will be able to explain how each savings tool works, as 401(k)s, IRAs, stocks, and bonds can be quite confusing. After guiding you through the many available resources, your financial advisor should also be able to help you narrow down your choices and build your portfolio to match your needs. Everyone’s retirement plans are different, so it’s crucial that your savings efforts are targeting at your expectations.
Retirement saving can start as general contributions to a savings account, but as that account grows it is important that you take advantage of these tools to get the most out of your money. With the help of a great financial advisor, and with the foresight to start planning early, you are sure to be able to save enough to live out the retirement of your dreams.