When to Start Saving for Retirement: 11 Facts Everyone Under 30 Needs to Know

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Setting up a retirement fund is a vital financial skill that could have a huge impact on your future quality of life. Despite the importance, a lot of younger people simply don’t know when to start saving for retirement.

When to Start Saving for Retirement

Making the right choices early on could make all the difference between a happy retirement or a constant struggle. This article lists 11 things you should know about saving for retirement.

Let’s get into it.

1. When to Start Saving for Retirement? As Early as Possible

If you take one thing away from this article, make it this point. One of the biggest regrets that people often have in life is that they didn’t start saving for retirement soon enough. The earlier you start saving, the more value you’ll get from your savings.

2. Consider the Risks

Not every investment is created equal. Make sure you factor in the level of risk you’re taking. Certain investments are fairly safe, while others carry a significant amount of risk. You shouldn’t be taking big risks when it comes to your retirement funds.

If you’re not sure about the level of risk you’re taking, it makes sense to look for financial advice. For example, you might visit a website like https://www.hensoncrisp.com/aboutus.php. Every day investors lose money because they failed to appreciate the risk, don’t let it happen to you!

3. Take a Small Amount of Big Risk

When saving for retirement, you should mostly rely on safe investments that will slowly but surely increase in value. With that said, it can pay off to take a small amount of big risk.

High impact, low probability events like the global COVID-19 pandemic can wreak havoc on the global markets. The crisis transformed the economy in such a way that certain risky stocks became incredibly valuable overnight.

By exposing yourself to a small amount of big risk, you could potentially add a lot of value to your retirement fund.

4. Make Use of Government Incentives

The government offers many incentives to save, so you should find out how they can benefit you. For example, you might consider investing in a 401k retirement fund. This not only results in a lower tax bill but also allows you to save tax-free.

Government incentives can be quite complicated, so you might benefit from some financial advice in this area.

5. Maximize Your Contributions from Your Employer

In some cases, your employer will also contribute funds into your retirement fund if you contribute to a retirement account. In most cases, this basically counts as free money. If your employer offers this kind of policy, you should take advantage of it as soon and as much as you can.

If you’re unsure what your company offers in this area, consider talking to the human resources department.

6. Expect the Unexpected

Nothing is sure in life, therefore your retirement plan should account for the unexpected. For example, what happens if you suffer from a medical emergency?

Certain unexpected situations can totally wipe out your savings. If an emergency wipes out the funds you had to retire on, it could have a devastating impact on your quality of life.

It makes sense to plan for these unexpected scenarios. Don’t let a single emergency destroy the dream retirement that you’ve spent decades building.

7. Think About Your Family

When planning for retirement, you also need to consider the financial needs of your family members. For example, if you have children, will they be going to college? Failing to take these kinds of expenses into account can lead to a difficult situation where you’re forced to choose between your retirement and your family.

Not only do you need to factor in unexpected personal expenses, but you also need to consider these for your wider family as well.

8. Be Consistent

One of the most important pieces of advice you can receive about saving for retirement is to be consistent. If you start saving early and consistently, you’ll be shocked at how much money you can accumulate.

Ideally, you should use an online savings account to automate the saving process. That way, saving for retirement becomes second nature, and you won’t be tempted to consider your savings as part of your disposable income.

9. Be Cautious With Stocks

You would always be cautious when investing in the stock market. No matter how sure a stock seems, you never know what’s going to happen in the future. For example, pre-pandemic investing in a Hollywood production company may have seemed like a “sure thing”.

Thanks to the COVID-19 pandemic, cinemas have been closed, and movie industry stocks have plummeted. While you should certainly consider investing in stocks, you should put the majority of your savings into something safer.

10. Consider Working With a Brokerage Firm

If you’re trying to save for retirement, it makes sense to work with a brokerage firm. These firms offer a wide range of relatively safe investment options such as mutual funds.

They can also offer you financial advice. Take care to make the right selection because brokerage firms usually charge a fee to switch your account to another company.

11. Don’t Be Tempted

One of the biggest downfalls of pension funds is when people get tempted to treat them as disposable income. You should set up an online savings account to ensure your pension fund is kept separate from the rest of your money.

You should only be tempted to dip into your fund in the event of an extreme emergency.

Look to a Financially-Secure Future!

So, now you know more about when to start saving for retirement. While your retirement might seem a long way off, it is probably closer than you think. Making the right choices early in life can make all the difference to how much you’ll enjoy your final years.

After a lifetime of work, you deserve the financial freedom that only a retirement fund can provide.

If you want to learn more about other finance-related topics, take a look at the rest of our blog.

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