Better Now Than Later

Most young adults are not thinking about retirement when starting out on their own because of more pressing concerns such as entering the work force, opening up a bank account, and deciding where to live. Planning for the future when you are young isn't a priority; however, it is the time to start saving for retirement.

Few people begin a retirement savings plan at the beginning of their careers. Perhaps they feel they do not earn enough money to set any aside for investing or think there will be plenty of time to start. I can understand this kind of thinking, because it is how I felt when I started my first job. Now, no matter the reason, it is more important than ever to start saving toward retirement at an early age.

Consider the future availability of government and employer-provided retirement sources. They are less certain; therefore, depending on them for retirement income is a risky plan. The Social Security Department has frequently reported that future payouts of benefits could be in jeopardy. Additionally, many companies no longer offer pension plans, limiting the reliability of traditional retirement income sources.

The good news is you can depend on your own resources for future income by starting a savings plan such as a company 401(k) or an Individual Retirement Account. To maximize the payoffs of these types of accounts you need to start contributing early, but finding extra money to set aside for savings can be difficult. One approach is to maintain a spending record to

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determine trends of unnecessary expenses. For example, money spent eating lunch out twice a week could buy lunch groceries for quite a lot of days. The money saved could easily be budgeted for retirement contributions without creating any real burden. If you are tempted to neglect your savings account, a second approach is to think about the older person you will become, and pay that "person" first. There really are no excuses for not having money to save.

You should also start saving early because money saved over a long period of time, even in small amounts, has great benefits due to its growth potential. Looking at the example of skipping fast food twice a week, estimate the savings to be $10 a month or $480 a year. When compounded annually after 40 years with an 8 percent return, the total adds up to $134,295. Obviously, even small amounts add up