There are a number of things that you begin to reflect on as you move further away from college life. These things include: career, travel, life, money, family, friendship, and is this it?
As I move further away from that time in my life, one of the biggest topics that I wish I’d had guidance on was the importance of beginning my retirement savings in my twenties. I spent a lot of time in my twenties: traveling, working hard in between the trips, dancing (I was also a dancer), and just enjoying life.
Regrets
I don’t necessarily regret doing those things. I do, however, regret not opening up a Roth IRA (Google this) and investing $50 dollars a month and saving for my future. I also regret not cultivating a habit of saving regularly outside of saving for awesome trips abroad.
Not Sexy
Let’s be honest, saving for retirement isn’t sexy. Retirement is this vague, misty unknown future. Your future is filled with people and experiences yet to happen.
So, why am I harping on this topic? Because saving for retirement is one of the most important things you can do for your future self besides maintaining your health.
Ask Your Parents
I’d like you to go to your parents and ask them about their retirement plans. Now, this sudden interest in a topic that you may not have mentioned before might freak them out-be prepared.
See what they have to say.
Some parents may be very comfortable talking about their retirement plans and may have been actively instructing their children on finances their whole lives. Other parents may be uncomfortable with the topic. Don’t judge them too harshly, maybe they didn’t have guidance on the topic of money and are struggling themselves. That might be just the scare you need to get on top of your own finances, it’s part of Kim’s story at Eyes on the Dollar.
Find More Stories
Google some retirement stories and read what people are saying about the importance of preparing for retirement early in life. In every retirement calculator, the earlier a person begins saving for retirement the more they will have AND the early savers will always beat people who begin saving later in life.
People are living longer, more vibrant lives as they embrace retirement. So, saving for that future-you is important.
No Excuses
Many young adults will argue that they don’t make enough money to save. But, you can’t tell me that it is impossible to set aside $50 dollars a month towards your future. If you’re overwhelmed by the process of saving for retirement do some research (which you should do anyway) and look at your overall budget. Think about what you could cut back on in your budget so that you can begin saving.
Take the time to read about personal finance. Educate yourself. You can’t claim ignorance! There are libraries everywhere, e-books, and professional financial coaches. Make sure that anyone you work with is well-vetted.
Despite everything, I’m well on my way to have a well-funded retirement fund. But I still wish that I had begun earlier.
I didn’t save for retirement like I am today when I was in my twenties although I had a works pension plan and owned two homes before the age of 24. Looking back knowing what I know today I wish I would have done more research into retirement savings. I’m getting on the right track now living in Canada but certainly have a ways to go. My wife on the other hand has been investing since her early twenties.
canadianbudgetbinder recently posted…Milk in a bag or jug: Which do you prefer? : The Grocery Game Challenge #1 July 28-Aug 3, 2014
As long as you weren’t being foolish with your money (which you clearly weren’t), all of the investments and savings that you can amass in your 20s put you ahead of the game later in life.
I didn’t start early enough and have just lucked out that I’ve caught up to my cohort in terms of savings.
Michelle recently posted…Money Microagressions
I’m glad I started early with my father’s encouragement. I opened an IRA and contributed to my employer’s retirement plan immediately after starting my first job out of college. I know many co-workers who cited “not having enough money” as an excuse…yet they always seemed to have money for other stuff like clothes, tech gadgets, etc. In the beginning, your account doesn’t look like much but after some time…it really starts building fast! So yes, start saving NOW!
Andrew@LivingRichCheaply recently posted…How Exciting is Your City?
I hear the “we can’t afford it like you can” excuse all the time. I spy the new tablet in your hand when you say that, people!
I always say that you should certainly start funding your retirement well before saving for your children’s college. This may sound silly to some, but while you can borrow for college– you CANT borrow for retirement. You have to start saving now, before it is too late!
jefferson recently posted…Money Mantras: Becoming Rich One Thought At A Time
Excellent, excellent point about being able to borrow for college! Also, financially relying on your kids in retirement is a rather risky retirement proposition. What happens if they do the modern-day equivalent of becoming a nun? What happens if they end up with a terminal illness or something else horrific happens?!
I only wish I had starting planning for my retirement 10 years ago (I’m 35y.o. now)! I would be in a great financial position, even after the effects of the GFC etc.
Time in the market is a critical component of compound returns. Start early!!
Mr Ikonz @ Project Ikonz recently posted…June net worth update – June 2014
Hindsight, eh? You’ve still started younger than many!
I think there is some value in telling others to start earlier, because you’re right, you can’t start TOO early when it comes to retirement. I think the best approach is to contribute more and more as your income increases (assuming it does). Another approach that I think works well for some people is to start contributing more when their student loans are paid off. That increased cash flow can go many different places, but it can also really amp up your retirement savings.
DC @ Young Adult Money recently posted…The One Simple Way to Avoid Money Arguments
Agreed. That’s similar to our system. We knew our income would increase over time, so the tax benefits would be greater in the future. In the meantime, we aggressively paid down debt. Now, our incomes have leveled off a little bit and can make use of the tax exemptions. Plus, we have a very solid financial footing by paying for some consumer goods (like two vehicles) and paying off the mortgage.
I just started saving for retirement now at 28 (closer to 29), and it now feels great, but it’s rather daunting trying to guess what you’ll need. Even starting now I find it daunting, because I’d need to save a huge percentage (semi-mustachian style) of my current income to reach it. That seems crazy, doesn’t it? I’m not 40 and realizing it… Yet that’s what it’s returning. Work until 67 while contributing $1450! What the?! Thank god for a good pension match.
Alicia recently posted…10% Increase In Internet Fees – Poof!
Ya, ours works out to a stupid-high number, too. Thank goodness we also get a high match! I find that we drop money in during tax season, in lump sums, so it’s not as daunting as saving huge values each month, if that makes any sense?
I opened my ROTH at 24. I didn’t have much money, but I knew that time was more valuable than money in growing my investments. I’m so grateful for that knowledge early on!
Stefanie @ The Broke and Beautiful Life recently posted…Blogging Lessons Learned
Nicely played! Good point about the knowledge, too. Just having one makes you learn things like how to deal with your taxes and whatnot.
With retirement, it’s amazing how much of a difference time makes. Giving yourself ten less years at the average savings rate could cost you about half a million dollars in the end! Great lesson here, it’s always best to start young!
Joshua L Rodriguez recently posted…Managing Your Loss Exposure | Binary Options Corner
Yes, compound interest is pretty nuts!