Saving for Retirement Early Will Save Your Financial Life
When should one start saving for retirement? This is an extremely important question, not most people know the answer to. And a question not many people ask themselves, for that matter. Because they believe that there is time. There is a lot of time left until they have to think about this unknown land known as retirement, a distant stage of their life they associate with getting older. And from a psychological point of view, people do not want to get older, they do not want to imagine themselves in that stage of their life, so, consequently, they do not want to think about retirement investments. But the thing is, they should. And fast.
What does investing for retirement imply?
Thoughts stand before any action. So, what you should first and foremost do is acknowledge, take in the idea that retirement will come, that it is part of your life. The sooner you come to the thought, the better. Do you want to know where you stand on retiring? Take a short 10 questions quiz created by RetirementInvestments right now!
The next step would be imagining your retirement period. Visualize that you are 60. What would you be doing? How would a normal day look like in your 60s? A good visualizing exercise is journaling – think about each and every detail you can come up with and write it down. By visualizing the activities, you will be doing, you will be able to determine the money you will need to follow through.
Another aspect you should be dealing with is your health. Make sure that you go to annual doctor and dentist appointments and stay healthy throughout your life. The way you live your early years will determine your health later in life and the amount of money you might have to invest in medication. Do not rule out the unexpected and get ready to save!
Start saving in your 20s
The answer to the question posed at the very beginning of this article is “early”. What does early mean? Well, somewhere in your early 20s will do. Of course, you are too busy planning trips and retirement is the last thing on your mind. But statistics show that it is way easier to save when you are young. Why? Because you have little to no responsibility. You maybe pay rent, but you do not yet have a kid and all the associated expenses. You didn't buy a house yet and maybe you are still living with your parents. It's high time you started investing in retirement! You don't trust me? Give this article a read: https://www.investopedia.com/articles/personal-finance/040315/why-save-retirement-your-20s.asp.
Create a financing plan
Another question you must find an answer to in order to succeed is: “How will you create the financing plan?” Most people who want to start saving for retirement stop here because they have no idea how to do that and get scared by the thought that they will have to stop doing all the things they love to save money. If you do not have the know-how necessary to create a retirement map – and most people don't – you can hire an investment advisor. He will help you prioritize according to your goals and create a plan.
The trick is you should not view retirement investing as a chore, but rather as an activity you have to do to be safe later. Need a tip? Start saving $10 per week, which is $40 per month and $480 per year. You do lifelong math according to the age you start saving for retirement. Here is a retirement calculator that will help you see if you are saving enough.
Go for an abundance mindset
Switching to retirement saving mode or taking any other life-changing decision, for that matter, requires a mindset switch.
To begin with, try switching from little savings to seeing the big picture. Cutting down expenses like drinking water instead of a cocktail of a Saturday evening is not the answer. And I am not saying that you should not pay attention to how you spend your money; it's about not turning it into an obsession. Why? You will get bored, lonely or even miss the window for having kids.
What you should do instead is prioritize your career. Find a way to harness your potential and get better and better-paid jobs by the years. This might require higher expenses such as rent in a big city, but it will all pay off with a way bigger salary. Once you start getting paid well don't just put your money in a drawer waiting for retirement. Start investing! This is the best financial any advisor will give you. Once you saved enough money, buy a tiny flat and rent it! There is this article about a self-made millionaire who retired at 34 that will make you realize what a mindset switch is in this specific field.
Knowing where you stand is paramount for being able to save properly. This is why you should take your time and just do the math. Take into consideration your salary, household status and savings you have so far. Think about how long you want to work and the life you want to have once you retire – you might want to teach English to children or travel the world – these are two very different approaches, but are meant to make you understand that you can choose anything. What is important to do is visualize your life, so you know how you would like your future to look like.