Without going deeply into the mathematics of it, suffice to say that the difference between starting a savings program when you’re in your 20s versus doing the same when you’re in your 30s or even 40s represents a huge difference in what you will have in your retirement and savings accounts when it’s time to retire.
In other words, the longer a person waits to get started saving and putting money into retirement, 401(k) and other savings accounts, the bigger the hurdle will be to overcome in order for them to retire “comfortably”.
At the root of this problem (which, by the way, is widespread) is the complete lack of financial education that Americans receive either in high school or college. While the skills we need to get a job and earn money are being taught to us (more or less), saving and investing skills as well as prioritizing how our money is spent and saved are almost never dealt with.
Even worse is the fact that, at almost every turn, there seems to be something more “important” than saving money or saving for retirement. There’s always a nicer automobile, a better smartphone or tablet and a bigger television. Indeed, the examples are virtually endless. Another problem is that the further person is from retirement, the more important these luxuries seem to be.
The biggest problem is that, no matter how “awesome” they are, even the biggest pile of obsolete electronic products won’t pay the grocery, mortgage, doctor, heating and other bills once your retirement nest egg begins to run out.
Giving at least a little bit of thought to the long-term effects of your spending habits is thus vitally important. Even though having more choices is usually a good thing, many people make poor choices if they have too many options. Sadly, this can leave many of us with few or no choices later in life when we need them the most.
The inescapable truth is that as a person gets older, no matter who they are, their ability to earn money from working diminishes greatly. This can be due to many things including physical illnesses, mental weaknesses or even the simple fact that, after a person reaches a certain age, it gets much more difficult to find any job at all.
If a person hasn’t put away a sufficient amount of money into retirement plans like 401(k)s, IRAs and other investments, they won’t be choosing which new smartphone or flatscreen TV to buy, they’ll be choosing between whether or not to buy food or medicine.
The good news is that most people can remedy this harsh sounding situation by simply starting a savings plan as early as possible and then sticking to that plan vigilantly throughout the years.
If you’re not sure whether you’re saving enough, would like to know more about retirement savings plans or simply have questions about your best options, please let us know and we’ll get back to you with solid advice ASAP.