Some people don’t think about retirement savings until it’s too late. Saving early is the simplest way to secure your retirement. One easy way to keep yourself on track is to start saving now, and act like you’re going to retire early.
Retirement is Closer Than You Think
The average age of retirement in the United States is 66. If you’re in your 20s today or even your 30s, you could have just three or four decades before you stop working.
If you aren’t financially secure before that time, you could suffer a lot of unnecessary stress in retirement.
Savings Throughout Your Lifetime
According to national data, your savings should be close to the following figures for each decade of your life.
- By the end of your 20s, you should have at least $32,000 saved.
- If you’re in your 30s today, you should have close to $67,000 saved before you hit your 40s.
- If you’re in your 40s, your savings should exceed $81,000. Here your income is likely to peak, so savings will become particularly important.
- When you reach the end of your 50s, your savings should exceed $163,000.
These numbers might appear to be small. After all, some analysts recommend saving at least $1 million for retirement. That’s because the figures are based on averages and account for those who have lower than average or no retirement savings at all.
Of course, if you were planning to retire early (or save like you were), then these numbers should be much higher.
Save Everything You Can
Most won’t like to be told that they need to save more. But the fact is, if you don’t save now, you’ll have less in retirement.
Saving early creates more opportunities. If you sacrifice during your 20s you could have more cash savings to put towards a retirement fund or other investments in your 30s. The earlier you save, the more interest you will gain, and the higher your return will be.
The most frugal savers cut almost all luxuries from their budget. Eating out, online subscriptions, expensive cell phone plans, and other spending can all be eliminated to save hundreds or potentially thousands each year.
All the small sacrifices will be worth it as you see your savings grow. You could have more freedom to engage in stock trading, or, you could purchase stocks and bonds for dividends over the long term.
Even if you don’t plan to retire early, it pays to save like you will. At minimum, you’ll have more cash to supplement your retirement. In the best-case scenario, you’ll be able to invest more and grow your wealth faster.
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