Waiting Too Long To Save For Retirement
/The Cost of Waiting to Save
First Published Date : March 7, 2011 ADawnJournal.com
As more and more people spend more and more of their money each year instead of saving for retirement, we are seeing a growing number of people who have no money for retirement, or are putting money away too late. This is a serious problem and it means that the retirement age of 65 could be moving up to 70 as many couples have trouble quitting working and living off the meager money they have saved over the previous few years.
The longer you wait to save, the more money you are going to have to save each year. If you are a late starter for retirement, you could see large portions of your income going towards paying for your impending retirement. For example:
· If you earn more than $100,000 and you do not save for retirement until the age of 55, you will end up paying 40 per cent of your income towards saving for retirement to catch up on what you need.
· If you earn more than $80,000 and you do not save for retirement until the age of 55, you will need to save 37 per cent per year.
· If you earn more than $40,000 a year and do not save for retirement until the age of 55, then you will need to put aside 27 per cent of your income to have enough money for retirement.
This is why it is so important that you start putting money away very early on because it will allow you start putting small amounts away that will grow over time. If you put $2,000 away every year in your 20s, you will have $20,000 saved by the time you are 30. If you then put $3,000 away every year in your 30s, you will have $50,000 saved by the time you are 40. At this point, you can probably start putting away more, because you will usually be making more. That means, you can put away $5,000 a year until you are 60 and you will have saved a total of $170,000 totally since you began saving money at the age of 20. That is just a quick example of how easy it is and it does not figure into the interest you gain, any investments you have and more.
Saving just a bit of money from the beginning can really help but if you don’t, you need to be prepared to sell items you don’t need, cut back on expenses and put away a large portion of your income towards saving money for retirement. You do not want to be 70 and still working because you did not save for retirement. Too many people are in that situation and you do not want to be one of them so do not let it happen to you. Begin saving now and if you don’t, make sure you put as much as you can away once you near retirement age.
NB – All figures shown above are for illustration purposes only and may not be accurate.
