What age is the right age to start thinking about retirement?

Question

With Social Security slowly going under and the cost of living going up, I'm beginning to think about retirement and how old I should be when I start to invest. I'm just entering my twenties and it seems like the distant future, but as we all know, you should be prepared.

I've asked some of my "more mature" co-workers and they said that investing now would be wise, while all my friends say to live life and worry about it later.
I would like to know what you think. Should I invest now or later? How should I invest? Any tips?

Answer 1

Invest now, don't wait. The best thing going for you right now is time. If you start investing later, you lose that. Why is time a good thing? Returns compound. In other words, if you have a $100 today and earn 5% on that, you will have $105 at the end of the year. The following year if you earn 5% again, you will not have $110 but $110.25 - that extra 25 cents is the 5% return on the 5% return. Over long periods of time, this adds up to a significant portion of your return.

As for living life, you can still do that to some extent while also saving. If you are offered a 401k plan at work, contribute at least up to the match. I would do the max if possible.

The worst thing is to not be able to enjoy life in your 60s and 70s because you have no money. Can you imagine working for close to minimum wage just because you didn't save in your 20s??

Answer 2

Retirement is a toss-up for me. I don't think ill be dumping a whole heap of money into it. But i think if governments offer any initiatives then take advantage of them. Having said that the more you throw in now the more you come out with at the end, beauty of time-value of money (compounding interest). However, in most countries you dont have access to this money til you have retired. So it is somewhat a leakage. of your wealth. You can't use it for any other purpose but that of retirment. once you toss up between having the additional financial security of later against the use of the funds now for things like confidence, and as a charge for other investments and assets.

If you can find alternative investments that you can set aside for retirement then that maybe a more tactful approach as you can still have the flexibility, whilst ensuring a fairly safe future. Dumping it into property is a popular tactic. People just buy a property pay off the loan on that and upgrade to a bigger property and when they are ready to retire they sell the property and take the whole lot with them. No restrictions on the lump-sum withdrawls or additional tax etc etc. In australia you can avoid CGT if you live in the property for a period of 12 months , if you manage to do this then your in a good position. Theres plenty of examples like this.

Choose one that is suitable for you. But defnitly start thining about it now

Answer 3

It is never to early to start preparing for retirement, because you will need more than social security to live comfortably and enjoy doing things during retirement. But you should not start thinking about retiring until you have enough passive and/or easy enough income to sustain you through thick and thin. Many people regretted retiring around 2000/2001 because their investments took a dive and many had to go back to work. And I imagine anyone retiring in the past few years is having 2nd thoughts after investments took a beating since the last major elections and even cash is not paying much interest.

Answer 4

You can answer your own question. Here's the question: Which would you rather have $1 million, $500,000 or $200,000?

If you contributed the max to an IRA ($4000/yr) starting at age 20, you would have $1 million by age 60.

If you wait until you are 30 to start, you will hvae $500,000 at age 60.

If you wait until you are 40, you will only have $200,000.

Now, here's the magic: How much did it require out of your savings to accumulate this?

Start at age 20:
$4,000 x 40 years = $160,000

Earnings $ 840,000

Wait until age 30:
$4,000 x 30 years = $120,000

Earnings: $ 380,000

Wait until you are 40:
$4000 x 20 = $ 80,000

Earnings: $120,000

The magic is called compound interest. Compound interest only works when you have a lot of time.

(Based on 8% growth)

Answer 5

Invest now. If your employer has a 401k plan. Start there. Or start a traditional IRA. Start with mutual funds. Probably the safest for the next 40 years would be a fund that tracks the S & P 500 index. You can do both: save and have fun.

Answer 6

16

Answer 7

I think it is best to retire at about 60+ . It also depends on how fit you are at that time. I think you should start investing now. You should save enough money for your life when you retire.

Answer 8

The power of compounding is the greatest weapon you will have to build wealth for retirement.

Check out the first 3 chapters of my free eBook at:
http://www.invest-for-retirement.com

and then you will have a better understanding of why you should begin investing now.

Basically, once a person is done with their education and is in the work force, they should then begin investing for retirement. Learning to spend less than you earn early in life is a predictor of wealth accumulation.

Answer 9

You should start to think about retirement when you are fifteen. The earlier you start to save in an IRA, the more interest you gain, the more money for your retirement.

Of course, you are young and there may be other obligations such as children, which require your money. That said, please do not forget the IRA.

Answer 10

I think you should start investing now. the younger you are the better. if you start investing now, you'll be financially safe by the time it comes for u to retire