Reasons to Start Early
Fidelity Investments
If retirement is thirty or more years away, it can be difficult to make
saving for it a budgeting priority. This article will help explain why
starting young is one of the best strategies you can employ for your
retirement savings.
| The example below shows the effect compounding has on
retirement savings. |
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Ways to Start Saving
| 1. |
Save in an IRA - Savings in tax-deferred
accounts, like an IRA, can compound more quickly than
those in comparable taxable accounts. |
| 2. |
The next time your salary
increases (or you get a bonus), consider setting aside
some or all of it before you get used to having the extra
money. |
| 3. |
If your expenses decrease, like when you
pay off a car loan, try to set the entire amount aside for
savings. |
| 4. |
Pick a regular expense that you can
reduce, such as dinner out or car washes, and save the
money instead. |
| 5. |
Take advantage of payroll deductions at work, direct deposit, or
an automatic transfer from your checking to an investment account.
If you save your money automatically, before you spend it, saving
can be almost painless. |
|
If You're 30- to 40-Years Old |
|
| You may be just beginning to think seriously about
retirement or you may be well on your way towards reaching your
retirement savings goals. |
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| If you have a savings plan in place — that's great.
Now is the time to think about increasing the amount you save each
year. |
|
| If you haven't started saving yet, it's never too
late to begin! Try to put away some money each month into a retirement
savings account such as an IRA or an employer-sponsored plan e.g.,
401(k). |
| What Prevents You From Saving? |
|
| Paying Off Debts |
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| Paying off debts, especially charge accounts, can be
critical to your long-term financial future. However, many people just
replace old debts with new ones. If you wait until all your debts are
paid off to begin saving for retirement, you may jeopardize your
chances of achieving your retirement goals. |
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| Raising Kids |
|
| Raising kids is an expensive and long-term
proposition, particularly if you plan to help them with college costs.
Remember, your financial future and retirement are priorities too. If
you wait until your children have graduated from college to begin
saving for retirement, you may have problems meeting your retirement
goals. |
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| Living Expenses |
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| It's often difficult to find the extra money in the
budget to set aside for savings. But consider that some of your
current earnings don't really belong to you. Instead, they belong to
the older person you'll become. Developing retirement goals now and
starting to set aside a small amount regularly can go a long way
toward making sure you have a comfortable retirement. |
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| Too Many to Name! |
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| You're not alone. Often, managing a budget requires
constant juggling of priorities. Remember that retirement is a
priority too. Waiting until you have fewer priorities to begin saving
for retirement may jeopardize your retirement goals. |
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To Summarize: Start Small but Start Now |
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| Don't feel that saving has to be "all or nothing!"
You don't have to choose between current financial obligations and
saving for retirement. Saving even small amounts while you're paying
your obligations can put compounding to work for you. Pay yourself
first! Have money deducted automatically from your paycheck or set up
automatic savings from your checking account, so you save before you
can spend. |
|
| Money you save now, even if only a small amount, has
the most time to benefit from the saving principles of time,
compounding, and tax-deferred growth. Additionally, it may never be
easy to begin saving a larger percentage of your earnings all at once.
Starting small and building your savings over time can be a good step
toward reaching your goal. |
Learn more about Fidelity
Investments
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