Young people who have just started earning won’t have retirement on their minds, but the truth is you’re never too young to start considering your saving options ahead of the day when you step back from full time work. If you don’t consider yourself young anymore, then there is a greater need to save now. Look at it this way: the sooner you accumulate savings, the more time your money will have to earn interest. You can choose to put your savings into a tax-deferred retirement account or you can invest in an insurance policy. Websites like Compare the Market can show you what different insurance providers offer in terms of life insurance. It’s a reasonable assumption that no one has confessed to wanting to work forever, so if you want to leave the toiling hordes early – or give yourself a leisurely vacation somewhere far -make the most of what you have now, which is time. Further detailed advice on retirement income planning is available. Setting aside a retirement fund guarantees you a comfortable life with no worries about how you’ll keep paying your rent. You can start small, and if you are already saving up for something, continue, and set aside a modest portion for your retirement fund. You can increase the amount you save by refraining from purchasing unnecessary items that hinder you from attaining your savings goals.
Benefits of Having a Retirement Fund
In addition to being able to have a comfortable and leisurely retirement, there are many other reasons why you should start saving now. One is that you will be able to live independently even after you stop working. If you have children, you’ll want them to build their family and establish their home without worrying about you. In addition, becoming fully dependent on the welfare system could affect your lifestyle – you may not be able to enjoy a life of retirement with limited financial resources, which may be just enough for your basic necessities.
On average, Australians can expect to live 20 years in retirement.
Will you be financially comfortable for that length of time? These retirement calculators could help you to understand what to expect later in life.
Where to Start Saving
Having a regular savings account is good, but for your retirement fund, you may want to opt for a tax-deferred account instead. Why? Not only does it produce a compound effect, it also reduces your income taxes. A tax-deferred account can also allow you to defer the taxes on the earnings that accrue, and it makes your money work harder by earning more the longer your savings stay put. For instance, if you start saving when you’re 30 years old and save 3,000 AUD a year for ten years, when you turn 70 years of age the money you have saved (30,000 AUD in total) will become at least 472,000 AUD if the tax-deferred account has an 8% annual return. This compounding is one of the best reasons for choosing to save money in a tax-deferred account, and the additional savings you gain can definitely ensure you a financially secure future.
Planning ahead
Retirement isn’t only for those who have reached a particular age; it can also be your choice. You can start saving early so you can reap the benefits of early retirement as well. To keep yourself financially secure in your latter years in the lifestyle that you want, plan early and start saving as soon as you can- the best time is definitely now.
