Why You should Start Planning for Retirement Early
December 3, 2021
Planning for retirement is an important process for anyone in the working world to take on; however, many young adults who are just entering the working world often feel as though retirement planning is many years into the future.
What many of them don’t realize is that it is better to start planning for your retirement earlier rather than later. Retirement planning is even encouraged as soon as you collect your first pay check.
One reason why it’s better to start planning your retirement early is to have a much smoother transition into retirement. When you start planning from early, you can do away with any worries that may come with late retirement planning.
Another reason is you have less responsibilities compared to later in your life. Because of having fewer responsibilities, you can put more money into your retirement fund. This can lead to you having a large sum of money put away for retirement, which in turn, can make your retirement a more enjoyable one. This is called compound interest, which is the process by which money grows overtime.
Planning for retirement early also offsets aggressive savings in your later years. This means that instead of putting aside more money over a five-to-ten-year period, you could be putting aside less money monthly over a 30–40-year period. This money will build up overtime and gain more interest overtime.
Finally, by starting your retirement plan early, you can actually set you up for early retirement. If you have enough money in your retirement fund you can retire from as early as your 40s or 50s. Of course, you can only do so if you have enough money in your retirement fund, which is why it is important to start planning for your retirement at an early age.
Many people today are opting for early retirement and if you put the right plans in place this can be an option for you.
What is early retirement?
Early retirement is basically the practice of leaving employment before the statutory age, especially on favorable financial terms. There are persons who are forced into early retirement due to various reasons out of their control. On the other hand, early retirement is really something good and a lot of persons would love to achieve this.
Here are some pros of Retiring early.
Enjoying leisure activities or education opportunities in other words, enjoying things that you probably wouldn’t have time for if you were working. Retiring early allows you to enjoy things like traveling the world, returning to school and other fun activities that might not be easily accessible as you age.
Spending more time with family and friends and we all know that this is an extremely big deal for most persons, especially parents who have to be away from their children majority of the time and as a result they miss a lot of important milestones in their child/children lives.
Retiring early can eliminate this, it will allow you freedom to seriously invest some time in your family, friendships and also forming new personal relationships if needs be.
Early retirement is worth it. There is literally no right or wrong answer as to when or how you should retire but if you plan to do it early and want to experience the potential life-changing benefits that comes with it, you need to have a strategic plan. I've seen many people leave their jobs too early only to end up financially stressed because they underestimated how much they'd need in retirement.
It's also important to address the deeper reasons behind why you want to retire if there are any. If you're seriously considering early retirement, I highly recommend asking yourself the following questions:
Why am I rushing to retire early, Am I running from something?
What will I do after I retire early, Am I running towards something?
How will retiring early change my life, for better or worse?
Am I sacrificing too much to retire early?
Have I gained enough perspective from those who have already retired?
If all your answers to these questions are positive, Happy Early Retirement.
On a more serious note, I highly recommend being 100% sure if retiring early is what you want. Take the time out to learn about all the pros and cons so nothing will come as a surprise when you make the big step.
Talking about the big step. In order to do so there are some important things to do that will help you with your retirement planning. So, I want to leave you with these tips to keep in mind.
Start saving early – The wise move to make is to set yourself up for the future.
Have an Individual Retirement Account – Set up a separate account from your regular savings account that you put money into specifically for retirement.
Learn about pension plans – Make sure you know about these plans that are offered through banking and government institutions or at work.
Make investments – You can use money from your savings and put in into different investments towards retirement.
It is in your best interest that you do not interfere with these things. Create your plan, stick to it and encourage your friends and family to do the same, whether the goal is to retire early or not.
Written by: Leon Thomas, Xoa Grant, Eusheeka Lewis
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