Retirement planning is very important. In fact, it must be a priority for everybody regardless of whether or not one is an employee, self-employed or a business owner. Retirement is basically a time when you stop working without having to earn a living. Ideally, you must have steady sources of income that support you and your needs and better yet, provide you comfort and good life when you retire.
Time plays a very important role in retirement planning. The earlier you start preparing, the better your chances of retiring being independent and secured financially. Unfortunately, this is one very important aspect that a lot of people have overlooked. A lot of people neglect the idea of planning for their retirement while they are still young and when they start working because they still want to enjoy the fruits of their labor. There is nothing wrong with that. What is wrong is when retirement planning is totally being neglected and not given any importance. As a result, people end up starting to plan for their retirement when they are older, and after wasting some very precious time and opportunities to make their retirement better and earlier.
Here are some very good reasons why you should start planning for your retirement when you start working.
1.) Money needs time to grow. Assuming that money is placed in the right financial instrument, it needs time to grow and the longer the time horizon, the better and greater is its chances of growing. Time is an integral part of investments and it also decreases the risk. Good options are putting it in mutual funds, buying shares of publicly listed companies or even using it as a capital to create a business or invest it in tangible assets. All of these financial instruments give capital gains in time.
2.) The earlier you start, the better your chances of correcting your mistakes. One benefit of starting early is for you to pinpoint the mistakes that you’re doing in financial planning and implementing the right ones. If you start planning for your retirement at the later stages of your life, you may end up implementing the wrong or not so efficient plans and solutions for you. If you spot a mistake, you only have a very limited time to make up for it.
3.) Starting early could make you retire early. It is a fact, everybody wants to retire early since everybody wants to enjoy life. If you start planning for your retirement early and immediately apply the things that you have learned, the chances of you retiring early is good. What would you prefer, still going to work from Monday until Friday from eight in the morning until five in the afternoon when you’re forty five or you just stay at home and do the things that you want to do since you know for a fact that you’ve got yourself covered financially?
4.) You get to avoid pressure if you start retirement planning early. Most people panic when they realize they’re already getting near retirement and cram in making a retirement plan. The result, disaster. If you start early, you keep yourself from getting pressured in achieving a good retirement and in fact, it could make you pick the kind of life you want upon retiring. The great thing about starting young and while working is that you get to have a regular source of income that will fund your retirement. This alone will take a lot of pressure off you because you have more time to prepare. Moreover, waiting too long to plan for retirement increases the chances you will need a lot more money in order to make your retirement plan work.
5.) Your financial foundation is more likely to be stable. Achieving financial independence and security is one of the goals of retirement planning and it is achieved by carefully and correctly establishing the right financial foundation. A financial foundation is basically made by increasing one’s cash flow, and getting protection through health care and health insurance; obtianing life insruance, investing for increased wealth and protecting one’s assets through estate preservation also help build a strong financial foundation. It takes time to establish a really solid financial foundation. If you cram or wait too long, you end up not properly implementing a financial strategy; this is more likely to contribute to an unsecured retirement.
Summing it up, retirement planning requires several steps, and each step requires some time in order to achieve. Starting early will benefit you a lot since it will make you more efficient and relaxed in planning, and it could possibly make you retire early.