You Can’t Retire If You Haven’t Saved
Saving is good. Spending may be flashier and make you feel better in the short term, but saving will pay dividends later on far greater than spending now can. When we’re young, we have a tendency to spend, spend, spend. And it is hard not to!
There is always something else to buy, or something to improve, or work on. Everything costs money! If you begin to save a little money early on, however, you won’t have to save as much money later. Paychecks may be smaller in your 20s than they will be in your 40s and 50s, but chances are, your expenses will be a great deal smaller too.
Saving has become a big issue here in the United States. According to a Federal Reserve report, the median retirement account by age is $37,000 for ages 35-44, $80,00 from 45-54, and $104,000 from 55-64 (SmartAsset). For those looking to retire somewhere between 65-70, having only $104,000 is far short for a comfortable and affordable retirement.
What can saving early do for your retirement now? As it turns out, a great deal! Let’s suppose you started saving $250 a month from ages 25-64. Imagine that money being invested and earning about 6% annually (a moderate estimate). By the time you reached 64 years old, you would have about $497,872. That is almost 5 times the average savings of folks from ages 56-64. The $120,000 you saved over 40 years turned into almost $500,000. Why? Because you started saving money early and let, as Albert Einstein calls it, the 8th wonder of the world do its thing. The 8th wonder being a little simple phenomenon called “compound interest”.
No human could ever better describe compound interest than Benjamin Franklin, who said compound interest is “Money makes money. And the money that money makes, makes money.” That is the difference between 1 day finding yourself with $104,000 a nearing retirement age versus waking up and seeing you have nearly $500,000 in your retirement account and ready to start sipping margaritas pronto. All because you started saving $250 a month in your 20s and began investing it.
Even if you have passed your 20s, 30s, or even 40s, don’t wait to start saving! The early you start, the bigger it will become. To leave you with one Albert Einstein quote on compound interest: “He who understands it, earns it; he who doesn’t, pays it”. Don’t pay it. Earn it.
If you want to learn hear more about finances and saving early, check out Xavier and Alex Urpi on “Real_Talk!” with Keith Smith and Jerry Miller or watch them discuss other financial topics on “Today y Mañana” on the I_Love_CVille Network: https://www.youtube.com/user/vmvbrands/videos!
