It seems like a no-brainer: if you start saving in your 20s instead of your 40s, you’ll have more money when you retire. However, according to statistics, just roughly 3 out of every 5 People– and only half of those aged 25 to 34 – are actively saving for retirement.
Furthermore, many are finding it difficult to save enough money for retirement, putting them in a position where they may have to work much longer than they anticipated. Clearly, if you want to take advantage of life’s opportunities and retire with confidence, you must start saving early and often. In that vein, here are reasons to begin saving while you’re still young.
Compound growth can help you save a lot of money
You can benefit from compound growth, which is equivalent to compound interest, when you invest your money. Compound interest allows you to earn interest on both your first and subsequent investment contributions, as well as the interest that has accrued over time. As a result, you’ll have a greater balance to earn interest on in the future, resulting in even higher returns.
Overall, compound growth is the key distinction between investing your money through a financial institution and stuffing it under your bed in a shoe box. It’s what can help your money grow – in certain situations, well beyond your initial investment.
You’ll be able to withstand market fluctuations
Market downturns can harm even the most conservative investors, which is why it’s so crucial to start épargne early. It indicates that if the markets fall, you’ll have enough time to recover. It can be much more difficult to recover if a market change harms you while you’re trying to save for retirement. Consider putting aside a significant portion of your income for retirement while also trying to meet responsibilities such as a mortgage, a child’s post-secondary tuition, auto loans, and so on.
Being prepared is usually a good idea. You never know when something will happen to alter your financial situation. Life is full of surprises, from unexpected work changes to last-minute vacation options. Putting money aside can help you deal with minor setbacks without having to make major changes to your financial objectives.
You’re leading by example
Many have young children by the time they are in their late twenties or early thirties. And one of the most important skills that young parents can teach their children is how to manage their money wisely. In short, by being good with money from a young age, you can teach your children the importance of saving early and being organized when it comes to money management.
In retirement, you’ll want to do more than just ‘get by’
Let’s face it, the last thing you want to do in retirement is worry about whether you’ll have enough money. If you’re like most Canadians, you’ll want to travel, spend time with relatives near and far, and purchase large-ticket items such as a boat or cabin.
You may also want to assist your children or grandkids in paying for their post-secondary education and starting their own families (for example, through a registered education savings plan). You’ll have a better chance of achieving these financial goals if you start saving early.