The Worst Reasons For Not Saving For Retirement
When it comes to saving for retirement, excuses and reasons to put off saving abound. Maybe we believe that there are more important things to spend our money on or that retirement is so far away that we have plenty of time before we must begin. Although these justifications may seem reasonable at the time, they can do great damage to your financial future if they prevent you from saving adequately for your retirement years.
Here are the most common reasons for not saving for retirement and how to overcome them.
I Don’t Earn Enough Money!
If you do not earn a big salary, it can be difficult to save for retirement because there are many immediate demands on your income. Although you may be living paycheck to paycheck, saving even small amounts can significantly improve your financial outlook for your retirement years. If you can save $20 per month, at the end of the year you will have saved $240 with little change in your quality of life. As you grow accustomed to putting a small amount into savings each month, gradually increase the amount saved by allocating half the amount of received pay raises or bonuses into the retirement account.
I Need To Save For College First!
Many parents put off saving for their retirement so that they can save for their children’s college education first. Experts warn against neglecting your retirement savings to fund a college savings plan because there are more opportunities to borrow or gain money for college than there are opportunities to obtain extra money for retirement. Parents can always help their children pay off a student loan and should focus on ensuring that their retirement years will be secure so they will not be a financial burden on their children later in life.
I Have Plenty Of Time For Saving!
Focusing on a financial goal that is decades away can be very difficult with so many immediate expenses facing us everyday. Saving for retirement now will reduce the amount of disposable income you have for other purchases, but beginning early means that you can save a lower amount of money over a longer period of time to reach the same savings goal. An individual in their mid-20’s that saves $2,500 per year in a retirement account earning an average of 7% interest can have nearly $518,000 saved by age 65. An individual beginning to save at age 40 would have to place nearly $7,900 per year into the account to reach the same goal.
Tags: financial management, retirement
