You may be a young person in your early 20s and at the threshold of a lucrative career. At the present moment, you may be under the assumption that retirement is a phase in your life which will occur in the distant future. However, Andrew Corbman, a financial advisor from Ashburn and founder of ASC Financial, Inc., says it is important for you to start saving and investing your retirement at this point in your life. He points out the following reasons who you should do so now:
- Skills you need to manage your finances
You need to take up the responsibility of managing your finances prudently as you have taken the initiative to live independently. This means learning to how to balance your monetary requirements for the distant future with your current expenses. This stage of your life, you may be thinking of trying to save money to meet a short-term goal like purchasing a new automobile and investing your retirement years at the same time.
As soon as you learn how to balance your priorities, the task of devising a feasible budget that takes into consideration your fixed and non-compulsory expenses becomes easier. Creating such a financial plan can enable to you accomplish the financial goals you have for the future and inculcate the necessary skills you need to manage your money matters. Andrew Corbman explains that developing such healthy monetary habits at this age and improving them as advances in age, makes the task of saving for retirement easier.
- The advantage of time on your side
When you are young and at the beginning of career, you have more time to save, invest and necessary adjustments to investment schemes you choose for your retirement years. At this age, you are likely to remain in the workforce for the next 40 years. You are in a position to take more potential risks with the money you invest in a particular investment scheme than a person twice your current age.
- Taking advantage of retirement benefits your workplace offers
Participating in a retirement benefits scheme like 401(K) plan that your employers offers to his workforce may be beneficial for you in the long-run. Under this scheme, your employer deducts a certain percentage of your monthly salary and invests it in this scheme before disburse the remaining amount to you. He/she makes an equal contribution on your behalf to this scheme. The amount under this scheme accumulates until you are eligible to withdraw it at the age of 59½ years. You are not eligible any tax on the contributions you make under this tax-advantage scheme until you withdraw the amount that accumulates when you retire.
- Flexibility of being young
At this phrase of your life, you may probability have fewer financial burdens like repaying your students’ loan than when you marry and have children. This makes it easier for you save money for your retirement years.
Andrew Corbman says the above reasons should be enough to convince you on the need to invest for your retirement years at this phrase of your life. If you start early, you will alleviate stress and tension in the later years.