The perks of saving early for retirement
The earlier you start the better.
According to the 2014 study by the Insured Retirement Institute, “It’s Time to Save for Retirement: The Benefit of Saving Early and the Cost of Delay” A worker putting off saving until age 35 would need to save 16 percent of their income to produce the same potential income at age 65 as someone who started at age 30 with a rate of ten percent. Waiting until age 40 increases the rate to 26 percent of annual income. In addition, the study showed a decrease in retirement income of two to three percent for each year the start of saving toward retirement is delayed. This leads to the question: What are some perks to start saving toward retirement early?
- Time: As a young investor you have time on your side. Reinvesting earnings over time allows you to generate wealth. The longer your money works for you the more wealth it generates.
- Increase in risk: Being young allows more time to recover from down turns in the market so you can tolerate more risk in an attempt to create larger gains in the early years of saving. When you get older you can move your money toward safer investments.
- Learn from mistakes: As a young investor you have more years to study markets and refine your investing strategy allowing you to overcome any investing mistakes you may make along the way.
- Use technology: With the multitude of online investing tools available, research and techniques are only a fingertip away. In addition to phone applications make sure to utilize financial and educational web sites, chat rooms, and social media. Investing is about knowledge and experience.
When it comes to investing knowledge is power. Studying, learning, and experiencing at the earliest age possible can help provide the possibility of additional income streams and a comfortable retirement. Seek out successful investors to ask questions and learn how to grow your retirement.
Michigan State University Extension has HUD/MSHDA certified housing counselors on staff to assist with the difficult process of foreclosure. To find a counselor near you visit the MI Money Health website or call your county extension office. Michigan State University Extension has released a new toolkit for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability, in the case that a recovery of their home is not possible. The toolkit is available to download free at the MI Money Health website.
Michigan State University Extension offers financial management and home ownership education classes. For more information of classes in your area, go to either the events webpage or the MI Money Health website.
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