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| Reasons to Start Early |
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| If retirement is thirty or more years away, it can be difficult to make saving for it a budgeting priority. This article will help explain why starting young is one of the best strategies you can employ for your retirement savings. |
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| The example below shows the effect compounding has on retirement savings. |
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Save in an IRA - Savings in tax-deferred accounts, like an IRA, can compound more quickly than those in comparable taxable accounts. |
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The next time your salary increases (or you get a bonus), consider setting aside some or all of it before you get used to having the extra money. |
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If your expenses decrease, like when you pay off a car loan, try to set the entire amount aside for savings. |
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Pick a regular expense that you can reduce, such as dinner out or car washes, and save the money instead. |
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Take advantage of payroll deductions at work, direct deposit, or an automatic transfer from your checking to an investment account. If you save your money automatically, before you spend it, saving can be almost painless. Find out about automatic investing at Fidelity. |
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| Jennifer is 30, and retirement for her is at least thirty years off. Right now her other needs seem more pressing. |
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| While Jennifer and her fiancé David may not have a lot of free cash, they do have one thing working for them: time. Saving even a small amount now can have a significant effect on their retirement savings, because the sooner they start saving, the more time their money has to potentially grow and compound. |
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| If You're 30- to 40-Years Old |
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| You may be just beginning to think seriously about retirement or you may be well on your way towards reaching your retirement savings goals. |
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| If you have a savings plan in place — that's great. Now is the time to think about increasing the amount you save each year. |
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| If you haven't started saving yet, it's never too late to begin! Try to put away some money each month into a retirement savings account such as an IRA or an employer-sponsored plan e.g., 401(k). |
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| What Prevents You From Saving? |
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| Paying off debts, especially charge accounts, can be critical to your long-term financial future. However, many people just replace old debts with new ones. If you wait until all your debts are paid off to begin saving for retirement, you may jeopardize your chances of achieving your retirement goals. |
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| Raising kids is an expensive and long-term proposition, particularly if you plan to help them with college costs. Remember, your financial future and retirement are priorities too. If you wait until your children have graduated from college to begin saving for retirement, you may have problems meeting your retirement goals. |
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| It's often difficult to find the extra money in the budget to set aside for savings. But consider that some of your current earnings don't really belong to you. Instead, they belong to the older person you'll become. Developing retirement goals now and starting to set aside a small amount regularly can go a long way toward making sure you have a comfortable retirement. |
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| You're not alone. Often, managing a budget requires constant juggling of priorities. Remember that retirement is a priority too. Waiting until you have fewer priorities to begin saving for retirement may jeopardize your retirement goals. |
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| To Summarize: Start Small but Start Now |
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| Don't feel that saving has to be "all or nothing!" You don't have to choose between current financial obligations and saving for retirement. Saving even small amounts while you're paying your obligations can put compounding to work for you. Pay yourself first! Have money deducted automatically from your paycheck or set up automatic savings from your checking account, so you save before you can spend. |
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| Money you save now, even if only a small amount, has the most time to benefit from the saving principles of time, compounding, and tax-deferred growth. Additionally, it may never be easy to begin saving a larger percentage of your earnings all at once. Starting small and building your savings over time can be a good step toward reaching your goal. |
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