It’s never too early to start saving for retirement. Even if you’re in your 20s or 30s, you can still take steps to ensure a comfortable life once you have reached the age of 65. But how much should you save? William Schantz of Mid Atlantic Financial LLC will explain how much you can accumulate if you start saving for retirement early.
When to Start Saving for Retirement
The earlier you start, the more time your money has to grow. If you start saving $200 a month at age 25, you’ll have about $1 million by the time you’re 65. But if you wait until you’re 35 to start saving, you’ll need to save more than $400 a month to end up with the same amount of money.
How Much Should You Save for Retirement?
The answer depends on a number of factors, including how much money you want to have in retirement and when you plan to retire. A good rule of thumb is to save 10% to 15% of your income for retirement. But if you want to retire sooner or later, you may need to save more.
For example, let’s say you want to retire at age 60 with an annual income of $50,000. If you plan to use the 4% rule, you’ll need to have saved at least $1.25 million by the time you retire. (This assumes you’ll withdraw 4% of your savings each year in retirement and that your investments will earn an average annual return of 7%).
If you don’t think you can save 10% to 15% of your income, don’t despair. There are other ways to boost your retirement savings, such as contributing to a 401(k) or IRA. And if you start saving later in life, you may still be able to retire comfortably by working a few years longer or downsizing your lifestyle in retirement.
Difficulties in Saving for Retirement
One of the biggest challenges in saving for retirement, according to William Schantz, is that it’s hard to predict how much money you’ll need. The cost of living could go up, or you may live longer than you expect.
Another difficulty is that life often gets in the way of saving for retirement. You may have unexpected expenses, such as a medical emergency or car repairs. Or you may want to take a vacation or buy a house. It can be tempting to dip into your retirement savings to pay for these things, but it’s important to resist the temptation.
If you’re having trouble saving for retirement, William Schantz suggests a few things you can do to make it easier. You can start by setting up a budget and tracking your spending. This will help you see where your money is going and where you can cut back. You should also consider automating your savings. By this, you will be setting up a direct deposit from your paycheck into your retirement account. This way, you’ll save without even thinking about it.
Never forget to always make a plan and stay committed to it. Decide how much you want to save and when you want to retire. If you waver from your goal, you will never see it come to fruition.
Saving for retirement is important, but it’s not always easy. By following these tips from William Schantz, you can make it a little easier and ensure that you’re on track to have the retirement you want.