After working all too hard for forty or so years of our life, we are ready to enjoy our retirement years. If we’ve worked fifty weeks annually for all of those years, that means we’ve had to wake up to an alarm clock some ten thousand times. When retirement finally arrives, we can do away with the alarm clock unless we are heading out for something fun that we love to do. Enjoying our retirement years is a reward we all deserve after a lifetime of working for so long.
To truly have the freedom to make the most of your retirement dreams, you will need to make sure you have enough money and retirement income to support your desired lifestyle. You don’t want to go through these key years having to worry about how to make ends meet, and finding out you don’t have the funds to enjoy the things you love. You will want to start early when it comes to Planning for retirement so you can make sure you will have all the retirement money you need.
Taking Advantage of Compound Interest
When you start planning and saving for retirement early, you have more time to leverage the value inherent in compound interest. Compounding interest allows you generate more money for retirement with a smaller investment of capital than if you were to wait until a later time in your working career.
If you were to invest $200 per month from ages 25 to 65 at 6.25% (total invested $96,000), you would have $420,000 in the account by retirement. A person investing the same $200 per month at 6.25% but waiting to invest until age 35 (total invested $72,000) would only have a retirement account of $210,000.
Able to Make Investments That Have Higher Rates of Return
If you start your retirement planning early, you will have more latitude to make investment choices that are aggressive and have higher rates of return. In general, people who are younger can afford to take more risks with their investments.
This is because you have enough years left in the workforce to recoup or recover from any investments losses you might have due to higher risk. As people get closer to retirement, they generally move toward more conservative strategies in investing.
Leverage the Value of Employer Contributions
When you work for an employer that offers matching 401(k) contributions, you will want to make the maximum contribution required to take advantage of the full matching. In essence, the funds that the employer provides are like finding free money.
Over time, these contributions really add up. If you started your retirement planning activity early, you will have many years where you can tap into these additional retirement funds that are provided by the employer.
Your retirement years can provide you with the opportunity to explore new travel destinations, enjoy your favorite activities and relax after 40 years of working. You will want to start your retirement planning and investing early, so you can make the money you need to make the most of this precious time.
Contact Info
Organization:Pension Parameters
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Website:https://pensionparameters.com/
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