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5 Signs it’s Time to Save for Retirement Now

Saving for retirement does not have to be difficult.

If you are in your mid 20’s or early 30’s, you have a long time ahead of you before you retire. After all, most people retire at around age 65. But how healthy is your retirement savings? Will you able to live comfortably during your retirement? To think that you have a lot of time ahead of you to start saving now, rethink again.

Here are some of the common signs that it’s time to start saving for retirement.

1. You Don’t Have any Retirement Savings

One of the most unpleasant signs and ugly facts that you can face is that you don’t have any retirement savings. If you don’t have any savings at all, no matter how old you are and no matter how good of a job you have now, it’s time to save now. It’s never too early to save for retirement. The longer you wait, the less control you have over the shape of your life during retirement.

The sooner you start saving for retirement, the bigger your nest egg can grow and the more money you will have by retirement.

What to do? Open a retirement fund and start saving as soon as possible. It can be through your employer through a 401(k) or 403(b) plan, or you can open your own individual retirement account, a Roth IRA or traditional IRA, through a investment bank, such as Vanguard or Fidelity.

Saving each month requires discipline. One of the most effective ways to discipline yourself into savings each month is to save automatically. Many employers offer that option. Some of the money can be deducted automatically from your paycheck. Since this money will never show up in your paycheck, you will never miss it.

Many banks also offer an automatic savings plan, where you designate a specific amount to be automatically transferred each month from your checking account to your retirement fund. This money is deducted before you have time to spend it.[

2. You Are Not Aggressive Enough in Saving for Retirement

If you are in your 20’s, saving aggressively will help to fund a nice and comfortable retirement. As the saying goes, when it comes to investing, time is your biggest friend. The more money you save, the more money you will have in your retirement fund, thanks to compounding interest. But figuring out how much to save or contribute to your retirement fund is never easy.

In short, if you are concerned that you are not saving enough, do these two things:

If you have a 401(k) through your employer, try to contribute close to the maximum per year ($18,000). If you have your own individual IRA, then try to contribute close to $5,500 a year.

See how to allocate your assets to boost your retirement savings.

3. You Might Live Longer

We cannot absolutely sure of how long we are going to live, but we can estimate how long we can live after retirement and how much we will need to fund a retirement.

The average life expectancy, according to Science Alert  is expected to pass 90 for the first time ever. So you might live 25 to 30 years longer after you retire. This means that you will have to provide for living expenses over for a longer lifetime. So if you expect to have a secure, comfortable retirement, you must start saving now and save aggressively.

4. You Don’t Have an Emergency Fund

Every one should have an emergency fund to pay for unexpected expenses such as a car repair, medical bills or loss of employment. The fund should have enough to cover six months of living expenses. Without an emergency fund, you may use a retirement fund to pay for these emergencies.

Withdrawing money from your retirement fund for these emergencies is never a good idea. When you withdraw money, not only there is a penalty, but also you will lose the potential earnings of the money you withdraw.

In short, not only you should have a retirement fun that is left untouched until you reach retirement. You should have an emergency fund to face these emergencies. A high yield savings account should be appropriate for such a fund.

See this article:What is the Number One Financial Goal You Should Have?, for more information.

5. You Have Too Much Student Loan Debt

According to Student Loan Hero, in 2017, Americans have more student loan debt than ever. Based on a study done in 2012, the average student loan debt for a college graduate  who attended a public college was $25,550. For those who attended a private college, the average debt was $39,950. For a combined undergraduate and graduate student loan debt, the average can range from $42,000 to $161, 000.

By having to pay these loan debts after graduation, we might not have enough money left to contribute to a retirement fund.

Let’ say you have a federal loan balance of $150,000 and you pay $350 every month. That’s $4,200 in missed retirement contribution every year. By the time you pay off that $150,000 balance, you would have missed out a lot on in retirement savings.

Do you agree or disagree? Do you know of other signs that it is time for someone to start saving for retirement? Share your thoughts in the comments below.

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