Do you have a retirement fund?
You do? Awesome! You’re well on your way to a bright future!
Wait, did you say no? If that’s the case, when do you plan to start your retirement fund?
“Ai, why are you asking me that? I’m still young! I’m only 25. I won’t be retiring ’til I’m old, so come on! Why should I start a retirement fund now? Let me live a little!”
According to a recent survey, 42% of Americans have less than $10,000 saved for retirement. 14% have nothing saved. And if you’re a woman, you’re more likely to not have savings than a man.
On the upside, it is getting better. In 2016, the number of women with less than $10,000 in their savings was 63%. In 2017, that was down to 58%. Now, it’s 45%.
Still, these numbers are alarming. Just like you, I’m sure these people have lived more than “a little”. I don’t know exactly how they’ve lived their life, and I’m not going to start assuming things. But one thing’s for sure: if you have nothing saved for retirement, then you should definitely start thinking how to start now.
Still not convinced? Here are five reasons why you should start your retirement fund now (not next month, or next year, or 10 years from now).
You want a secure future
Who doesn’t want a secure future? Nobody, right? All of us want to retire happily, without worrying or caring too much about where we’re going to get the money for our bills and expenses when we’re already old.
That’s the problem that a lot of those from the older generation face nowadays. With the rising costs of consumer goods and bills, more and more people are having a hard time trying to make ends meet, even with two, three, or even four jobs. It seems like as time goes by, living paycheck to paycheck is starting to become the norm in society.
In fact, as seen in a recent study, almost 80% of Americans now admittedly live paycheck to paycheck. There are a lot of factors that go into this, such as job quality, government policies, individual habits and so on, but 80% is still an alarming result, nonetheless.
Don’t be part of the statistic. If you want a secure future, stop living on one luxury to another and start saving for your retirement fund now.
Your goal is early retirement
Did you know that in the United States, the average age of retirement right now is 63 years old?
This is according to an interactive map by Aperion Care, which shows the average retirement ages for different countries in the world. On average, the country where people retire earliest is in the United Arab Emirates, at 49 years old, while the country where people retire the latest is in Norway, at 67 years old.
If your goal is early retirement, that means you have all the more reason to start your retirement fund now. After all, if you’re already 30 now and your goal is to retire at 45, that means you only have 15 more years to save for your retirement fund!
Unless you’re willing to do some major sacrifice in fifteen years, it’s highly unlikely that you’ll be able to save as much money as you could’ve back when you were still in your early 20’s. And it’s not just because you didn’t use to have a lot of expenses. True, perhaps now you have a mortgage, a car loan, or some other things that are putting you in debt, but there’s also one more thing that can prevent you from saving as much money: time.
Remember, when it comes to long-term saving/investment/wealth, time is your greatest ally– as well as your greatest enemy. Putting $100 towards your retirement fund 10 years ago isn’t the same as putting $100 towards your retirement fund now.
This is why you should start a reThe time difference makes all the difference in the world when it comes to savings or investments. Make it work with you, not against you.
Social security isn’t enough
Each country has its own social security made to help and protect its citizens especially when they grow old, but let’s face it, social security simply isn’t enough. How much do people actually get in social security now?
The actual amount depends on a lot of different factors, but here are some average monthly pensions and average monthly salaries, based on various countries.
- Australia: Maximum Pension: $1652.40 AUD || Average Salary: $6,271.60 AUD (gross)
- France: Maximum Pension: €1,655.50 || Average Salary: €2,250
- India: Maximum Pension: INR 200 (if monthly) || Average Salary: INR 79,222
- South Korea: Maximum Pension: 204,010 SKW || Average Salary: 1,000,000 SKW (max)
- United Kingdom: Basic Pension: €657.40 || Average Salary:€2,272.58
- United States of America: Maximum Pension: $2,788 || Average Salary: $3,713.67
As you can see, social security really isn’t enough, wherever you may be in the world. In South Korea, it’s especially bad. Many senior citizens are forced to continue working until past the retirement age just to be able to provide food for themselves and their dependents.
If you think you’re already good with just your social security, then you better think again.
You can start investing safely
Never invest money that you can’t afford to lose. That’s the personal mantra I always tell myself, every time I feel like investing more money into stocks and mutual funds. It’s tempting to start investing when you’ve already got a little money, but you should never ever try to do so.
While it may be good to have some investments, you can’t dive head-first into investing. You have to invest safely. And investing safely means that you should have some backup in case your investments go dry.
If you don’t have a retirement fund and something goes wrong in your old age, you’re doomed. You’ll have to take out all those investments in order to provide you with some funds. What if there was a market crash during that time? What if your stock picks weren’t doing well? What if your mutual fund was in the red? You’d have to swallow all the potential losses from your investments, all because you didn’t start your retirement fund yet.
The main point? Start your retirement fund now and think about investing later.
Time flies faster than you think
It feels like only yesterday when I first started high school as a doe-eyed freshman. Now, I’m in my 20’s. I’m starting to welcome my 30’s and preparing for a good life ahead as a (financially) responsible adult.
Time flies faster than you think. I cannot stress this enough. You might be having fun going partying all night, every night right now. Before you know it, you’re already 30 years old, not knowing where to get your next rent or car payment.
It’s scary to think about, but it’s real. It happens to different people from all over the world. If you don’t want the same thing to happen to you, you should start thinking more about your future now.
It’s not an easy decision to start your retirement fund now. After all, the money that you’re putting towards your future is money that you have to take away from your current funds. That could mean doing a little sacrifice here and there, like cutting out your regular coffee or reducing the number of times you go out per month.
If you think about it though, it’s all for you and for your future. And personally? I don’t mind really becoming more frugal if it means I get to enjoy my old age in peace and security. Everything comes with a cost, and in the case of a safe and secure future, a little sacrifice is certainly worth it.