Should I save now or save later?

Should I save now or save later?

Fact of the matter is, the longer you put anything off, harder it is to get started on it later. Though you may feel that today’s expenses are a lot to take one with your current salary, there are still ways you can save for your retirement. if you wait to save for retirement, you risk not saving enough for retirement.

If you choose to save even a small amount each month, you may be able to save a great amount over time. One useful method is to choose a dollar amount or percentage of your salary every month to pay into your retirement savings. With this method, you will be essentially treating your retirement as a required expense.

Here’s a hypothetical example of the cost of waiting. Two friends, Chris and Leslie, want to start saving for retirement. Chris starts saving $275 a month right away and continues to do so for 10 years, after which he stops but lets his funds continue to accumulate. Leslie waits 10 years before starting to save, then starts saving the same amount on a monthly basis. Both their accounts earn a consistent 8% rate of return. After 20 years, each would have contributed a total of $33,000 for retirement. However, Leslie, the procrastinator, would have accumulated a total of $50,646, less than half of what Chris, the early starter, would have accumulated ($112,415).

This example makes a strong case for an early start on saving so that you can take advantage of the power of compounding. Your contributions have the potential to earn interest and so does your reinvested interest. This is a great example of having your money work for you.

Suppose you have trouble saving money on a regular basis. Try savings strategies that take money directly from your pay check on a pre-tax or after-tax basis. Examples of this include employer-sponsored retirement plans and other direct payroll deductions.

Which ever method you choose, it’s extremely important to start saving now and not later. Even small amounts can grow to large amounts in the future. Another saving strategy you could try is to increase contributions by as little as 1% each year as your salary grows.

For more information on saving for retirement, click here or call us today at 201-342-3300. One of our associates will be happy to speak to you.