January 19, 2021Make Your Retirement Money Now
The best reason to start saving for retirement now is that your money will grow right away. The money your savings earn this year will keep growing for many years in the future. It‘s this cumulative effect of saving over time that makes today’s $1,000 contribution to your retirement plan much more valuable than the $1,000 you might sock the day before your retirement.
Why Take Responsibility for Your Retirement Early?
Imagine you just turned 25. If you were able to save just $250 per month in an investment account earning 5% APY, by the time you hit your 65th birthday, your savings would be over $370,000! But if you waited until you were 50 years old and plan to still retire at 65, you’d have to save roughly $1,385 per month ($16,620 per year) to meet that same goal, assuming the same rate of 5% APY. That goal will be much harder to achieve, especially if you will have to pay for your children’s college expenses, too.
Don’t worry. It’s not too late. Today is still the best day to start saving for retirement.
Can You Rely on Social Security?
Some people think they don’t have to save for retirement because they can count on Social Security. While it’s true that people should enjoy the benefits of life-time contributions into the Social Security system, it’s unlikely you’ll live a comfortable retirement on such a limited income. Plus, who knows if Social Security will be around in the coming decades? You can live your best financial life in retirement by planning for life after work now.
Can You Count Upon a Pension?
These days, pensions have become far less common than before. Many pension plans already face financial struggles and aren’t expected to survive in the coming decade. And although pensions are not currently allowed to cut plans for those who have already retired, they can reduce income for those who have not. Also, please keep in mind that the push to change current rules and allow struggling pension funds to change retirement benefits after retirement has already begun.
Only You Can Guarantee Your Comfortable and Worry-Free Retirement
You might plan to spend your retirement years playing with your grandchildren, traveling overseas, or even turning one of your hobbies into a small business. Still, it’s hard to predict what basic costs of living will be or how much income you can count on from a national retirement fund. But you can be sure that few ever regret saving too much money for retirement. If you can get your money to start helping you as soon as possible, your retirement dreams can be easier to achieve than you might imagine.
We’re Here to Help!
Today is the perfect day to start your long-term savings plan. If you have questions or would like one-on-one financial advice, stop by or give us a call at 1-800-226-6673. We’re here to help you plan for an amazing retirement.
Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.