Four Benefits of Saving Early For Retirement
Budgeting for retirement can be a struggle, especially for consumers who don't make a lot of money. But, if possible, it can be extremely beneficial to begin saving early on for post-work life.
Benefit No. 1 – Less waste
Starting to save for retirement at a young age forces people to create a budget. As a result, there is a good chance they will waste less money throughout their life. Following a strict budget can help consumers stay on track with their expenses as well as eliminate any area of overspending. Being able to follow a budget is an essential aspect of financial success, and can help people boost their retirement savings.
Benefit No. 2 – More time to choose the right opportunities
Successful saving is all about putting money into the right investments. It would be easy to just deposit it all into a bank account, but then it wouldn’t grow very fast. Instead, it is recommended to go with stocks, mutual funds and IRAs among other things. Starting early gives people more time to figure out which investment is right for them. Additionally, consumers are able to take more risk this early because they have much more time to recover should money be lost.
Benefit No. 3 – More confidence
Failing to save a lot of money for retirement can lead to many stresses. Not only does it lead people to worry about their own well-being, but also those around them. While it may not seem like stress can do much harm, it actually could hurt a person’s health. That being said, it would be wise to start saving early as this would allow consumers to be better prepared when it comes time to retire. The larger of a nest egg, the less worried people will have to be about their finances, so they can enjoy their lives.
Benefit No. 4 – Compound earnings
The earlier funds are put away, the longer money has to compound. Investing in a retirement plan allows people to take advantage of compounding with the tax-deferred benefits. While there may be times when investments don't grow, saving at an early age makes it easier to weather these periods. People need to let their money make them money, which is why starting early is essential.
April Lewis-Parks has more than 15 years of experience in the financial sector, she is a certified financial counselor, and a consumer affairs advocate. As the director of education and public relations for Consolidated Credit she is dedicated to generating awareness about personal finance issues and acts as their consumer affairs advocate. As host the of MissMoneyBee.com, she promotes financial education and offers timely and informative personal finance articles to educate the public. April’s promotional efforts can be seen in past issues of the New York Times, Washington Post, Newsday, Consumer Reports, the Business Journals, Money Magazine, Glamour, Cosmopolitan, Family Circle, among others. Connect with April on Google+.