Most people don’t expect to get old. Most people, unless they’re lucky, won’t retire until they’re old, which makes the word “retirement” sound less than desirable. Still, we all want to retire one day, and in order to live comfortably, or simply survive, we have to plan.
Is it too soon to start planning for retirement? I will say that planning for retirement at age 12 is a bit of a stretch, but it’s not much later when you should start. As soon as you start your first full-time job, you need to start planning. For most this will be out of college and for others it will be out of high school. For those who plan to go straight into the workforce and skip college, I highly recommend you reconsider. You must obtain some type of training, whether it be a trade school or an associate’s degree. This will greatly increase your potential salary.
If you’ve already been working for a while, you should start planning for retirement right away. Talk to your employer about the retirement plans they have available. They may have a 401K matching plan, which means they will match all or a percentage of what you put in. If you don’t take advantage of this, you are leaving money on the table.
If you’ve been working for a while and you’re a little older, don’t worry that you’ll never be able to retire because you haven’t been saving. You’ll just have to start saving a little more aggressively now. Talk to your employer about starting a plan and investing as much as you can.
The best time to start planning and investing for retirement is right now. The longer you wait, the less you can save. This is largely due to compounding. If you invest $20 a month now and for the next 30 years for a total of $7,200, you will earn much more than if you invest $7,200 all at once and wait just 10 years. How much more, you ask? At $20 a month for 30 years with an average stock return of 8%, you will end up with $30,005.90, and $7,200 invested for 10 years with an average stock return of 8% will have $15,544.30. That’s nearly twice as much with the same investment but more time and compounding. What are you waiting for?