Early retirement planning is a dream for many, and for others, it seems out of reach. You don’t have to reserve yourself to work harder later to retire at a decent age. There is hope and planning is the key.
Organization and discipline are the two qualities to develop. Having the best retirement calculator doesn’t hurt either. Can you do it? We think you can. We can’t structure an exact plan for everyone reading here, but we can tell you what the benefits are to planning as early as possible and why you should.
So, how early is too early? There’s no such thing as preparing for your later years too early. You can start the day you work. Just understand that investing your money so it works for you instead of letting it all sit in a bank and gain a small interest rate is the smart move. Look into a diverse investment plan or retirement plan that diversifies. That’s important in today’s volatile market.
Benefits of Planning Early for Retirement
The first benefit of planning early for retirement is that your money has more time to work for you. As of late, we’ve learned that there’s no telling what will happen tomorrow. Leaving enough time for market fluctuation and recovery is crucial. So what does that mean?
When we invest money too late in the game and you’re ten or fifteen years away from retirement age, you don’t have time to bounce back from an issue in your investments. Failing to invest and wagering on a bank account growing in ten years is ludicrous. It takes a half-million in the United States, that’s $400,000 to retire and or pay for an old age home when you need it, so it’s no easy task.
The second benefit is you’ll have time to make your dreams come true. Waiting for half your life to plan retirement is not the way to make the things you want to cross off your bucket list happen. What do you want to do when you stop working? Do you want to stop working or open a business for yourself? Or, do you want to travel the world? There are people right now retired on a cruise ship. Yes, they live on one full time and can see the world for around $77,000 per year with no bills and all-inclusive meals and amenities.
The third benefit is you’ll get to spend time with family, like kids and grandkids, if you’ve chosen that lifestyle. Why? You’ll be working less at those crucial times rather than working harder down the line. This happens when we have no proper plan and didn’t invest early enough. Later in life, we’re scrambling to save and feel restricted in our time.
The fourth benefit is the safeguard against the loss of social security. It’s not a sure thing because 2034 could deplete the reserve, which means a 21 percent cut in that benefit we need. If your money is working for you, the social security benefit is just an extra, which is the safest bet. Relying on social security is an unstable plan.
The fifth benefit is avoiding catch-up contributions. We just stated how unstable relying on social security is. Waiting too long could force you to throw good money that you could have invested in something more reliable and high-yielding into the abyss of catch up social security contributions. Doing this can mean you lose it. Can you lose money in the stock market? Yes. But at least you have the option to sell under expert advice. With anything else, a loss is a loss.
The bottom line here is the repeating trend in each benefit. The early bird catches the worm and multiplies it. Time is on your side. It gives you time to plan and time to bounce back from mistakes and losses that are out of your control. So, even if you’re in your 20s, get some sound advice.