Why Should You Save For Retirement Early?

by on May 10, 2018

For some of us, the thought of retirement seems so far ahead that it’s almost laughable to start preparing for it already. Your job probably already has a retirement plan that you’ll be utilising and while this can often seem like enough, the truth isn’t quite as simple. In fact, preparing for your retirement early will not only give you more time but also more money to live on as a result. While online payday loans are available in a financial emergency, these aren’t often available without a regular income and so ensuring you’re best prepared for life after retirement is a must. Here, we’re exploring deeper into why you should save for your retirement early.

The Younger You Save, The More You’ll Have

This can seem like a bit of a given, but the earlier you begin to save, the more you’re likely to have when you finally come to that long-awaited day you can step out of the workplace and never go back. Say you saved £100 a month – if you start saving at 18 and retire by 66, you’ll have an extra £57,600 on top of your state pension by the time you come to retire. Save the same amount and only start saving at 30, however, and you’ll only have £43,200 and so on.

You Can Avoid Relying On The Welfare System

If you start saving up early, by the time you reach the age of retirement you won’t have to rely solely on the welfare system to get you through your retirement years. You won’t be living nearly as comfortably, and could potentially need to find work again just to be able to make ends-meet. With a retirement fund already built up, you can live much more comfortably without worrying about where your next meal will be coming from.

You Don’t Want To Rely On Your Children

Similarly to the welfare system, you also won’t want to be relying entirely on your children by the time you come to retire. As nice as it can be to live with family, having to do so because you rely on them can be a stressor that neither you, nor they truly want to deal with, especially if your children have children of their own. By saving for retirement early, you won’t need to rely on them for financial assistance or be forced to live with them.

You Can’t Be Sure Of What The Future Will Hold

There are countless factors that can affect your retirement fund and what to expect when it comes to your time of retirement. With the ‘age of retirement’ raising, having a fund to keep you going could mean being able to retire earlier than your peers due to having the funds to do so, or you could find that changes in welfare systems, medical aid rates and tax rates could leave you worse off than if you save up your money in good time for your final retirement date.

You’ll Get More ‘Free’ Money The Longer You’re Saving

Whether it’s through your job, or a savings account that will build up your funds over time through interest, the earlier you begin to save the longer interest will accrue on your account. However, make sure you bear in mind that some employers have a ‘vesting’ period for your retirement funds, in which you won’t get to keep your built-up retirement fund unless you comply with the company’s vesting schedule. These are often put in place by companies to encourage loyalty. If you’re in the job you consider to be your career, you’re likely to be fine, however those prone to jumping from job to job could benefit more from saving their own retirement funds rather than doing it through their job.

Saving early for your retirement will ultimately lead to you being in a much better position financially when you come to retirement. Through careful saving, the utilisation of work pension schemes where beneficial and a good-interest savings account, you can start to build up your fund far in advance and ultimately have a much more comfortable life when you reach retirement.

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