Planning one’s retirement is something that many people take for granted. You might be thinking, “I’m too young for this,” so you put it off until you’re older. So instead, you keep on spending money on the things you want. But put it off too much, and you might realise it’s too late. Planning for retirement when you’re already close to retirement age is not wise. You may no longer have enough money to save that time.
With that in mind, it’s never too young to plan for your retirement. Here are some compelling reasons why.
The economy can be unpredictable
You never know when the next economic crisis will hit. It happened during the Asian Financial Crisis of 1997, the Global Financial Crisis of 2007, and again during the COVID-19 pandemic of 2020. The next one may just be right around the corner. Today, for instance, we may not be facing a crisis, but the surge of Artificial Intelligence (AI) has caused massive layoffs around the world. More and more people are losing their jobs to AI.
During a financial crisis, you will find it much harder to save money. You might even have to take out a loan from Cash Direct Jurong East or other moneylenders. So before any crisis hits, plan your retirement. The sooner you start saving for it, the more money you will have when you reach retirement age.
You are not forever young
Avoid the mentality that you are ‘too young’ to think about your retirement. Even if you’re just starting out in your career – having just graduated from uni and working your first job – it’s a good idea to start planning your retirement.
You won’t be young forever. Don’t wait until you’re older to save for your retirement. Also, anticipate any emergencies that may drain your financial resources. Before these can happen to you, save some of your money for your retirement early on.
One more thing – as you grow older, you are more likely to suffer from illnesses that can cost you a significant amount. While you’re still healthy, plan your retirement and start saving consistently.
Take advantage of the power of compounding
Compounding is a concept in investing that allows you to grow your money over time. Imagine you have an investment, and as it earns interest, you add the interest earned to the principal investment. With that, the principal grows over time, and it then earns more interest the bigger it gets. The investment then grows exponentially each time you add to it.
When you have this perspective, investing in your retirement while you’re still young makes perfect sense. The more money you put into your retirement fund, the more it will grow, and the more you will have upon the age of retirement.
You must not rely on your kids
If you do not have children (or don’t plan on having them), go ahead and skip this part. But if you do have kids, read on. This principle is of the utmost importance.
Your children are not your retirement plan. When they become adults, they will have their own lives and make their own financial decisions. You cannot force them to be your retirement fund, constantly handing you money in your retirement years.
By that time, your children may well have families of their own. Their financial priorities will be around providing for their wives and growing children. If you have to depend on them for your financial needs as well, it puts unnecessary stress and pressure on them.
You will have less worry and stress
It’s more achievable to save a small portion of your income consistently while you’re young. Saving in bulk much later in life may strain your budget too much. Combined with the power of compounding, you can be assured that once you reach retirement age, you will have enough money to live a decent life.
If you play your cards well, you may even have more than enough. You can have the money you need to enjoy life the way you want to in your senior years. You can travel, treat yourself and your family to fancy restaurants, and even lend a hand to your children in case of financial emergencies.
Conclusion
Planning for your retirement is essential for everyone. No one is ever too young to start thinking about their retirement. It’s not something that only middle-aged and older people do. In fact, it’s something that you should consider the moment you start earning your own money.
