I recently read an article on the Billfold about Merrill Edge’s new Face Retirement App.The app shows you a picture of your “old self” because “preparing for retirement is easier when it’s staring you in the face.” I’m not thinking about how to save for retirement – but should I be?
Should I start saving for retirement at 23?
To be honest, the idea of saving for retirement is out of reach. While I’m still saving money living at home, I’ve been thinking about moving out, which would be a huge cut into my monthly budget. I’m not the best at saving money for long periods. I tend to be great at being frugal and saving money when I’m saving for something “fun.” I love to travel and that’s where most of my savings go, but maybe I should be more practical. Maybe putting $100 a month towards a retirement fund would be a good place to start?
Reasons to Start Saving Now
The sooner I start saving the more my money will grow. According to Bankrate.com, “If you begin saving for retirement at 25, putting away $2,000 a year for just 40 years, you’ll have around $560,000, assuming earnings grow at 8 percent annually. Now, let’s say you wait until you’re 35 to start saving. You put away the same $2,000 a year, but for three decades instead, and earnings grow at 8 percent a year. When you’re 65 you’ll wind up with around $245,000.” That’s a HUGE difference…over $200,000!
Even if I can only save as little as $25 a month now, this will help me get used to putting money aside. Just the exercise of saving every month will make it easier to start saving more as I get older. Eventually, as my salary increases, I’ll be able to put more and more aside each month. If I wait, it may be harder to get into the habit of saving money and I could end up putting it off for much longer.
Reasons to Wait
The only reason I have for not saving for retirement, is that I’m not making a great deal of money. I don’t want to give up the “fun” of my twenties just so I can retire early. I’m already struggling to save money to move out (eventually) so I’m pretty tight on cash as it is. That being said, I think I could manage at least $25-$50 a month. It’s a start, right?