Between life’s many surprises and the power of compound interest, early action is your surest route to future financial freedom.
Financial freedom means different things to different people. Let’s take a minute to explore what it means to you.
Start by picturing your perfect retirement – that day in the future when you only work if you want to, not because you have to.
What do you see? Traveling? Pursuit of new passions? Maybe it’s just the free time to do as you please. Take a few seconds to put yourself in that moment and really let it sink in.
Whatever picture you’ve painted for yourself, one thing is clear, you’re probably going to need some money saved to achieve it. It’s tempting to put off saving till later, but regardless of your situation, the best favor you can do for your future self is to start saving for retirement now. Here’s why.
1. The Future is Unpredictable
We never know what the future will hold. Economic conditions, health issues and other unpredictable factors mean there’s no guarantee you’ll be able to work and save later.
2. You’re Going to Need a Sizable Chunk
There will always be competing priorities for your money, but retirement is expensive and is likely the largest goal you’ll ever save for. With longer life expectancies, you could need enough money to last 30 years – or more! Saving even a little now will help you reach that big sum later.
3. Your Money Needs Time to Grow
If you invest the money you save in your retirement account, it can earn compound interest or earnings. The more time you allow for compound interest to work, the larger your account can grow. If you wait too long to start investing, you’re taking valuable compounding years out of your savings equation.
The type of interest earned on the amount you originally deposited in your account.
This is the amount you earn on the original deposit amount and the interest accrued in the account. Put another way, it’s interest on interest.
Do you relate to any of the folks below? Flip the card to see what the financial pros have to tell you.
“I’ve got plenty of time. I’ll worry about saving for retirement later.”
The sooner you begin, the more money you’re able to accumulate through the power of compound interest.
“Who’s got extra money to save for retirement? We have bigger priorities right now.”
There will always be competing priorities for your money, but retirement is a huge expense and starting sooner helps you get there. Even saving a little now will help.
“Now that I’m out, I’ll work my civilian job until I’m 65… that gives me lots of time to make up ground on my savings.”
You’ll likely be able to work for many more years, but you shouldn’t bank on it. Guard your future against the unexpected by saving now.