When you’re young and just getting started, saving money for retirement may not be your top priority. That’s understandable if retirement is way down the road for you.
But the truth is the earlier you invest in your retirement, the better. The average retirement these days lasts about 20 years. And you want those years to be as comfortable as possible.
The best time for future planning is now. Here are 5 reasons you should start planning for retirement early.
1. Consider the Uncertainty of Social Security
The Social Security trust fund is depleting. By the time you retire, there’s no guarantee that Social Security benefits will be available.
That’s bad news for all the people who have spent years or even decades contributing to an uncertain program. It’s possible the government will fix the problem, but you can’t base your retirement plan on an uncertain source of income.
Planning and saving for the future is in your best interest. Having a separate retirement income like a 401 (k) or an individual retirement account (IRA) can help bolster your security in your retirement years.
2. Maximize Tax-Advantaged Contributions
The amount you contribute to your retirement savings during your working years matters. Many employers offer 401(k) plans and will match the amount you contribute.
That’s free money. And you should take advantage of it. With a traditional IRA or 401(k), you contribute pre-tax income. You don’t pay taxes on any gains until you make a withdrawal.
These contributions are also tax-deductible. This helps you reduce your taxable income and lower your tax burden each year.
3. Make the Most of Compound Interest
If you haven’t heard of the wonders of compound interest, take note. With compound interest, the money you invest in retirement earns interest and that interest earns additional interest.
That’s a win-win situation for you. And the earlier you start investing in a plan and earning compound interest, the better.
4. Retire in Comfort
If you make a plan and stick to it, you could retire with plenty of money to enjoy your retirement years. No one wants to struggle in their later years, but many seniors do.
You can avoid this dilemma by starting financial planning early. Invest in your life now so you won’t have to worry about your finances later.
5. Create a Safety Net
Life is unpredictable. You never know when you’ll get a curveball. So it’s important to make a plan and be prepared for all of life’s little surprises.
Having a secure retirement offers peace of mind. Although the goal is to let your retirement savings grow, it’s critical to have a safety net to tap into in case of an emergency.
Having a safety net can save you from financial ruin or bankruptcy if disaster strikes.
Start Your Future Planning Now
It’s never too early to begin future planning for a comfortable retirement. No matter your age, the steps you take now can bring you closer to a strong financial future.
Whatever your financial goals may be, Omnistar Financial can help you develop a plan suited to your individual needs. Contact us today to discuss what we can do for you.