Retirement is often something we want to think about later in life. But unfortunately, later comes pretty quickly and most people find themselves ill-prepared for this stage in life. According to the Federal Government, the Social Security age is increasing to 67 for those born after 1960. It’s beneficial to start saving for retirement as early as possible. Let’s look at a few benefits of early planning.
1. Increase Your Compound Interest
The entire concept of compound interest is built upon time. The earlier you start saving the longer you have to let that compound interest build your savings. Compound interest results in an amount of money growing significantly as the interest builds upon itself. An individual who starts their retirement savings plan in their 20s simply has more time for money to grow than someone who starts in their 30s or 40s.
2. Improve Your Financial Flexibility
When you put off retirement planning until later in life, you’ll need to put aside a bigger chunk of each paycheck in order to get to the same goal. This can really eat into your present financial flexibility. The ideal scenario is to be able to put money aside for retirement while also having money to enjoy right now as well. The earlier you start saving for retirement, the more flexible you can be with your contributions.
3. Rely Less on Social Security
Early retirement planning means less dependence on Social Security income later. Social Security income can feel uncertain at times, especially as the number of people needing Social Security benefits is increasing. It’s wise to plan a retirement that doesn’t depend heavily on Social Security benefits at all. If you start planning and saving early, you can independently fund your retirement plan without an overreliance on the fragile Social Security system. It cannot be understated how important it is to ensure that you have your own ducks in a row, without having to rely solely on governmental assistance.
If you would like to learn more about retirement planning, and other forms of financial planning and wealth management, please contact South Star Wealth Management today. We look forward to hearing from you and discovering more about how we can assist you. Don’t hesitate to reach out to our team of professionals!