If you fail to plan, then you plan to fail. Sadly, many of those who are nearing retirement age failed to plan for their old age. They face the stark reality that they will soon be out of the workforce without much to live on for the rest of their lives. Not everyone has a support system such as generous family members and friends who are willing to lend a hand. The ideal age to start planning is when you are young as you will be able to harness the following:
The Power of Compound Interest
Compound interest can turn small sums into large fortunes over time. The more years you have, the bigger your savings and investments will get. For example, let’s say you save $200 per month starting from the age of 20 until you retire at 60. This is a modest sum that should be easy to stash away no matter your income. If you invest it in an instrument that grows an average of 10% each year, then you are going to find over a million dollars in your account for your nest egg. Without compounding, that would only be $96,000 after 40 years.
The Possibility of High-risk Investments
When you’re young, you have the luxury of failing since you have plenty of time to learn and start again. You have decades of productive working years ahead to recover from difficulties. You can engage in riskier investments that could pay you lots of money in the future if it all works out. As long as you have retirement planning Tucson AZ well, minor setbacks can become springboards to your success.
The Availability of Early Retirement
An early start means that you could potentially have enough to retire on even before the usual retirement ages of 60-65. Some are able to retire by 40 or 50. The choice is yours whether to continue working to increase your savings or call it a day and enjoy your wealth. Even if you don’t retire, having a substantial sum allows you to quit a job that you don’t like and pursue activities close to your heart.
The Avoidance of Bad Financial Decisions
Being financially literate at a young age will allow you to avoid common pitfalls. Your decisions that directly or indirectly affect your wealth will be based on sound reasoning. Your retirement goals can serve as your guiding light in choosing a partner, a career, an investment, and so on.
Consult a retirement planning Tucson AZ specialist to learn more.