So, let’s take a look at how important is retirement planning. If you are in your 20s and 30s, you’re definitely thinking that retirement is so far far away and you got plenty of time to get started. And when will you start? With the next paycheck, right? How many paychecks ago did you say this for the first time?
A Quick Example Using Some Simple Numbers
Let’s say you are 35. How much money do you think is enough to retire with at 65? Meaning you will not have to work even a part time job. Would 1 million dollars be enough for you? At $50K / year, this should take you 20 years, i.e. to the age of 85. This means that if you do not consider accrued interest, than you have $1,000,000 divided by 30 years to save this money. The question now is, are you putting away $33K / year to a retirement account? At 45, this will become $50K / year. However, if you start at 25, then you only need to put away $25K / year, i.e. roughly $2100 / month.
There’s Also Good News
The example above shows some scary numbers, right? But it’s not all just bad news. Using some planning and inviting compound interest to your life, you can get to your goal much easier. As we already discussed in this article on dominating your finances, utilizing compound interest will help you. If you start saving $50K /year at age 40, then you only need to do this for 10 years. Compound interest will do the rest for you. At 65, you’ll be looking at a guaranteed value of $772K and possibly more.
How Important Is Retirement Planning Then?
It’s crucial! Regardless of your age, the time to start is now! The sooner you start, the more work will compound interest do for you. Looking at the examples we gave you, starting at the age of 20, you can achieve your retirement goals by 40. Financial world offers many options. It is not easy to understand them all. No, it’s actually impossible! And that’s where we come in. Use the form below and let us guide you and help you find the right solution for you.