4 Tips for How Young People Should Think About Retirement

Source: Thinkstock

Source: Thinkstock

If you’re relatively young like me, then it might seem silly to begin thinking about retirement. But if you ask most Baby Boomers today, they’ll probably tell you that it’s a good idea because chances are you’ll be asking a Baby Boomer who didn’t and is consequently unprepared.

As a young person, it may seem like you have time before you need to worry about these things, and you’d rather take the money you would have put away for retirement and spend it on something fun. But as I’m about to show you, preparing for retirement while you’re young is crucial to saving up enough money to retire the way you want to, and 40 years from now you will have wished that you had taken these steps in order to prepare for your future.

1. Put money away regularly and start now

This is so easy that it is easy to forget to do it. But even putting away $100/week can make a huge difference. Don’t believe me? Consider that if you put away $100/week for a year and then generate an average annual 8 percent return for 40 years, this $5,000 becomes over $100,000! With this in mind, it is clear that the early years are the most important in building long-term wealth that can support you when you’re too old to work or too old to want to work. If you start late, then you miss out on most of the benefits of the long-term power of compounding, and you have to save 3-5 times as much.