Last week we celebrated my youngest daughter’s birthday. She turned two years old. Those kinds of benchmark moments in life always put me in a reflective mood. It hardly seems possible to me that my youngest could be two already, but having double checked the dates and verified with the proper authorities, it appears that two years really have passed since she entered our lives. In all the hustle and bustle of everyday life, that time just slipped by so quickly.
It got me thinking about the passage of time, and of how we prepare ourselves accordingly. Have I set my family up to be in the best situation possible? Have I taken those steps I should have to make sure they are taken care of? Do I have adequate life insurance? What about my will? Perhaps most critically, have I begun saving adequately for retirement?
It is so easy to let that stuff go and think about it another day, but there is a problem with that. Time gets by us. With regard to your retirement, time is your fastest friend, but also your worst enemy. You can easily get caught saying, “We’ll start really buckling down and saving next year.” The problem is, you do that a few times and before long you’ve left a lot of years in your rear view without truly addressing your retirement savings.
Those years matter, too. If you started diligently saving money at 25 instead of waiting until 35, you’d have ten years of interest working in your favor! We’ve talked many times about how important a tool interest is in building your retirement savings, but we all too casually cast it aside sometimes in favor of instant gratification.
Waiting to start saving means you have to save more to catch up. If you started saving at 25, you could put away just 15% of your monthly income and retire at 67 with enough money to annually withdraw around 70% of your working income. Wait until 35 to start, though? Then you’ve got to save 25% of your monthly income to make up the ground you lost and retire with the same money and on the same timetable.
So what are you waiting for?