When you’re in your 30’s, retirement is a good 35 to 40 years away. You’ve got decades to plan, right? Technically, yes, but there are growing concerns about the Social Security fund, rising cost of living and job instability. America is shifting more toward a gig-based economy every year, and technology is causing many positions that were once deemed essential to be narrowed down or eliminated altogether. What does that mean for an adult who is actively working but still facing a relatively uncertain future?
Now, you don’t need to switch to panic mode and believe your entire career is in jeopardy. But you do need to think ahead and plan for retirement as early as possible. This will give you the greatest level of control as you age and the financial flexibility to adapt to any unexpected events. If you want some extra motivation to start saving, check out these reasons that will inspire you to start putting away cash now.
You’ll Earn More from Your Employer’s Retirement Plan
Because most employers match employee contributions, your employer-sponsored 401(k) account could be worth far more later if you start saving up now. You’ll get the added boost of their contribution matches with greater tax benefits as well. Starting younger also means you’ll make more without spending a fortune each month. If you’re putting away $100 to $300 a month for 40 years, you’ll make far more than someone who started throwing $500 a month into their account 10 years before retirement.
You Can Max Out Investments
Investing isn’t easy, but it can be a highly lucrative endeavor for retirement planning. If you work with an investment portfolio manager, they can help you choose the right assets and earn more. You can also consider other forms of investment you currently have, like life insurance. Did you know that you can sell a life insurance policy if it has a cash value? This allows you to enjoy thousands of dollars of added income in your golden years just by paying a monthly contribution for a few decades. You can use this guide to learn how to sell life insurance and what your policy could be worth if you look make a change now.
You Could Pay Less Taxes
Taxable income can be lowered if you contribute to your 401(k). You’ll enjoy greater savings and possibly a better refund if your taxable income is lowered. You will still have to pay taxes on the money you eventually withdraw in retirement, but it will be a fair trade-off for the thousands you’ll save over the course of your lifetime. With enough personal savings, you’ll also have more money at your disposal to cover any expenses you face immediately upon entering retirement. The added fees or taxes won’t be intimidating because you’ll have the savings necessary to easily cover them.
You Could Retire Early
You read that right. Saving sooner opens up the door for you to retire earlier. The penalty-free age to cash out your 401(k) or IRA will still be the same, but with more funds in the bank, a penalty won’t be nearly as dire as it is for those who didn’t save as much. After age 72, you’ll have to withdraw from your account. But do you want to be stuck working until you’re in your 70s to even begin to think about quitting a full-time job? Not likely. Bigger savings when you have the money equates to greater freedom when you’re in your 50’s and 60’s.
The views and opinions expressed in this commentary are those of the author and do not necessarily reflect the official position of Citizens Journal.