Retirement is a major long-term financial goal. When you’re younger, it may be difficult to keep something that seems so far away at the forefront of your mind. However, the earlier you start saving and planning for retirement, the more likely you are to save enough.
The Best Time To Start Saving For Retirement
In ideal circumstances, you should start saving for retirement as soon as you start working. This may seem like it’s overzealous, and many young people assume they have ample time to build their savings. However, due to compounding returns, money that you save earlier in your career has more time to grow.
As an example, imagine you start saving at 25 and put away $3,000 a year until you turn 35, then stop saving. With a 7% annual return, you will have approximately $338,000 by age 65.
Now, imagine that instead, you wait to start saving until 35. You save the same amount of $3,000 per year and in this scenario, you save until you reach 65. You may think that since you spent four times the amount of time saving, you would have more money, but you would actually only have $303,000, assuming the same 7% annual return as the previous scenario.
These above estimates are from CNN Money.
The Second Best Time To Start
Of course, while the ideal scenario is to start saving as soon as possible, this is not the case for everyone. Various circumstances can result in starting later. Maybe you weren’t aware of just how much of a difference compounding returns could make, or maybe your employer didn’t previously offer a retirement savings plan and you weren’t sure what other options were available. The good news is that the second best time to start is right now, and while you can’t change the past, you can choose to take control of your financial future today.
How To Start Retirement Planning
Making a plan helps you understand how much you should be saving to reach your retirement goals. This will be different for every person depending on how soon you plan to retire, how much you can afford to set aside with other goals in mind, what kind of retirement plan your employer offers, et cetera.
Having a financial planner can help make this process easier. Your advisor will consider the different factors that influence your financial life and will help you make a plan to save for your retirement.
Planning For Retirement And Much More
With a holistic planner like those at Wellspring, the benefits extend beyond retirement alone. Your planner can assist you with short-term and medium-term goals as long-term planning. We strive to understand who you are as an individual and what is most important to you. Then, we use our understanding of these values and goals to build a personalized financial plan.
If you’re an employee on one of our retirement plans, then great news! You already have access to help with retirement planning, plus discounted financial planning services. If not, we can help you maximize your savings with your current retirement plan while addressing the full spectrum of your financial life.
To learn more about our financial planning options, contact us today.
Wellspring Financial Partners, LLC does not provide tax or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
