Once you have finished college or university and start your first job most people start working and paying off their student loans. We all know that entry level positions do not give great salaries so it is easier to postpone any thoughts of retirement plans until you can afford it.
The harsh reality is that the sooner you start investing toward your retirement the better off you will be when you do retire and the less chance you have of having to work way past retirement age because your financial situation is too unstable.
Time is a powerful tool – With time on your side and the diligence required to invest a specific amount on a monthly basis you are able to have a retirement plan that pays out over $100,000 per year in returns.
Pay increases – Allocate a portion of each increase you get in your salary to your retirement plan. Salary increases is money you didn’t have before anyway, and while you are young you get a lot more increases than other people, the more you invest the greater your return.
Automatic payment – The best way to stick to your plan is to arrange with your employer that the portion of your money you want to put into your retirement is automatically deducted from your salary and paid into your retirement plan. This way you cannot be tempted to spend the money on other things.
Tax benefits and employer contributions – If your employer offers a retirement package where they match your contribution you need to take advantage of it because you are paying less tax on your salary and saving double the amount you can afford.
Investing simply – The market does not only go up, it does also drop and it can drop for months at a time. By investing monthly you are benefiting by buying shares at a lower price and then you benefit again when it goes up because you have more shares and when you sell at the higher price you profit. Long term investments like your retirement plan makes the monthly roller coaster of the market seem insignificant.
The best time to start investing for your retirement is between the ages of 20 and 29, the earlier the better. Start investing today and give yourself financial security in your retirement.