Double Your Retirement Savings by Investing Early

by on October 3, 2013

“If you would be wealthy, think of saving as well as getting.”

–  Ben Franklin

Most 20-somethings are considering the future, but aren’t necessarily planning for retirement. Young people are preoccupied with the now, because there’s a lot of pressing matters. Figuring out where to live and what can be afforded takes precedence over retirement planning. But, if a 20-something plans on being wealthy, it’s important to follow Ben Franklin’s rule of thumb. “…think of saving as well as getting.”

Below are some easy strategies for retirement planning and saving, but first you’re probably wondering what the benefits of early retirement planning are.

  • ~Investing young means you’ll be rich in retirement, because of compound interest. By saving young, you can double the amount you save.
  • ~You don’t need to save a lot when you’re young.  Instead, you can invest only a small amount and reap huge rewards.  Bankrate asks you to consider this scenario:

“If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for three decades instead, and earnings grow at 8 percent a year. When you’re 65 you’ll wind up with around $245,000 — less than half the money.”

Save a Little Every Week

A routine is going to help break the habit of living paycheck-to-paycheck. It’s called “paying yourself first” and it’s the strategy that makes young people richer.

Your savings can also work as an emergency fund. In your 20s, you haven’t spent a lot of time on the work force, but that doesn’t mean an accident won’t occur. Attorney Tim Pope warns that 70% of all Social Security disability applications are denied. If you have a nest egg saved, you’ll have the money to get by while you work with an attorney to appeal the disability claim.

Explore Workplace Retirement Benefits

Even if you’re not in your career yet, you can still benefit from employer offered retirement plans. 401(k) plans can be moved from one job to another, so if you start one at a diner, before moving into your more permanent sous chef career, you can roll over your savings into your new employer’s 401(k).

Most employers match their employee’s contributions up to 3%, so a 401(k) also means free money.

Avoid Debt and Build Your Credit Rating

Avoiding debt is going to ensure you have good credit later in life. Good credit helps you save, because it guarantees lower interest rates on things like mortgages, car loans and credit cards. In order to ensure good credit for the future, you’re going to want to avoid debt right now.

As soon as you turn 18, the credit card companies get busy sending you pre-approval offers. Because you’ve yet to establish credit, the interest rates are usually higher than they should be. The result is a higher cost of living earlier in life. Not having these debts will ensure you’re able to sock away more money for your retirement.

The Bottom Line

Young people are encouraged to begin saving as early as possible. It’s important to recognize the benefits of early saving. Because of compound interest, a young person can double or even triple their retirement fund. Get ahead of the game by planning for your retirement now.

{ 5 comments… read them below or add one }

Simona October 4, 2013 at 7:02 pm

Your article raised my awareness about retirement a little higher. I have been thinking for a while about investing into a private pension, but I am still undergoing my studies right now and cannot afford it. However, for people that are already active in the working force, I recommend following your advice.


Dan October 10, 2013 at 9:25 am

It is common sense that if you start saving early you will end up with no financial problems when you are old. These days, when the economies are such in a bad shape, it is wise to consider this advice and do it. Unless you want to struggle at an age when you are sick of those problems. It is entirely people’s choice. Cheers!


Anne October 28, 2013 at 10:39 pm

Thank you for sharing some easy strategies for retirement planning and saving. I think that young people should start saving as early as possible. It is very important to recognize the benefits of early saving. We really need to save for our future and for our retirement.
Anne recently posted..Before You Start Borrowing Against 401k Funds, Stop and ThinkMy Profile


Alysha December 7, 2013 at 3:58 pm

I really think this tips going to work for everyone. In today’s economy, the only way of creating a great and secured future is through the form of investing. Every little thing we do is a form of investment. Even education is an investment. Attending school to learn and progress to secure a stable and decent job. However, it is the first phase of creating a bright and successful investment. Education prepares us to future adversities, especially during the moment of retirement.
Alysha recently posted..Best Weight Loss Plans For Your HealthMy Profile


Mark January 13, 2014 at 2:27 pm

Good article. So true, you have to start saving EARLY. It’s amazing how quickly the years fly by. You’re in your twenties now, but before you know it you’re in your 40s, and if you haven’t started saving yet, you lost the advantage of time. I agree, get started early, even if it’s just a little bit. Better yet, have it withdrawn automatically your paycheck. That way you learn to live on less and the savings comes out without you even thinking about it.
Mark recently posted..A Mortgage Pro’s Tips On How to Shop for Mortgage Rates And Get a Really Great DealMy Profile


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