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Zhi Finance » When should I seriously save money for retirement?

When should I seriously save money for retirement?

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That is to say, you haven’t started to save money seriously for retirement, and you want to know exactly when to save money. The best and most frank answer to this question is: from now on. No matter how old you are, saving enough money to live a safe and comfortable retirement life is a big thing. You can’t afford to wait.

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You need a lot of money. If you are under 45, you may want to save more than one million dollars before retirement. Even if you have 20 years or more to save this money, you will still spend a lot of savings in the process. Don’t think about saving 10% of your income in the last ten years before retirement, so that you can save enough money for retirement. This kind of planning doesn’t work at all. If you are over 45 years old, although you don’t have to save 1 million dollars to live the life you expect, you need more money than you think.

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Use the power of compound income. Suppose you have invested $1 40 years before retirement in order to save retirement savings. If the rate of return on investment is reasonable, at 7%, you will get nearly $15 when you retire. This is the power of compound investment returns. Thirty years later, the investment growth is more than half of the original value. One dollar increased to 3.87 dollars twenty years after the investment and 1.97 dollars ten years after the investment. As you can see, the earlier you save money during your employment, the greater the income of money in the future.

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Think about how much you should save. If you persist in saving for retirement 40 years before retirement, you can save enough money for retirement as long as you save 6% of your salary. If you wait until 30 years before retirement, you should deposit 10% of your salary. If you wait until 20 years before retirement to deposit, even if you deposit 20% of your salary, the income will be lower than 10% of your salary ten years in advance. If you wait until ten years before retirement, it is almost impossible to save the same pension as the previous schemes. Even in the last ten years before retirement, 40% of the income deposited is lower than 6% of the income deposited in the forty years before retirement.

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Social security payments will shrink. Americans who retired before the millennium mainly depend on social security. Whether now or in the future, their social security funds will be adjusted according to inflation. It is difficult for them to find any change when they are alive. Those who are about to retire now will find that they cannot buy the same amount of things with social security funds in 20 years’ time – the government may change the formula of adjusting social security funds according to inflation, which will slow down the growth of social security funds. This will have a greater impact on those who retire 20 years from now. They may pay the pension later, and according to the inflation adjustment, the annual pension they pay is only 75% of the current retirees. The conclusion is, of course, that compared with current retirees, retirement savings have a greater impact on future retirees.

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No matter your age, and no matter when you plan to retire, the best way is to start saving money for retirement now.