The Finance Castle Rotating Header Image

Avoiding Financial Regret: Start Now!

All too often I speak to friends and colleagues of similar age that don’t have retirement on their radar. Its easy to understand why, I suppose, considering that your average twentysomething has a car loan, student loan, rent, saving for a house, weddings, honeymoons, and engagement rings to pay for. Where then, does retirement fit in to a younger person’s picture? Typically, it doesn’t, its just something to worry about “later.”

The obvious problem here is that the later you start, the harder it is to build up a significant nestegg, due to the wonders of compounding. The longer you save money, the more money you’ll end up with….sounds simple right? Read any blog from an older individual and ask them what they wish they knew when they were younger, and they’ll tell you they wished they started saving earlier!

I feel like I’m in this boat and I’m only 25, if I had started saving when I first brought in some income at 15, who knows what I’d have saved up and stored away at this age! Compounding is a serious force, and you want it to work for you for as long as humanly possible. It also allows you the ability to ride out the inevitable ups and downs of the equity markets, while older individuals may be forced to take a more conservative approach, lest they risk losing their already meager savings.

According to a recent article over at Yahoo Finance, let’s find out how much if a difference starting early makes:

“As an example, Vincent Barbera, director of financial planning at TGS Financial Advisors, offers two different scenarios: Person X deposits $2,000 into an IRA each year from the ages of 22 to 31, then stops, while Person Y deposits $2,000 each year from the ages of 31 to 65. Both have the same interest rate and allow interest to accrue. Person X will earn nearly $50,000 more than Person Y by age 65, even though the latter contributed $50,000 more to the account over 25 additional years.”

Examples abound on a variety of blogs, but I can’t seem to stress this point enough. Start now, and you’ll thank yourself later, instead of that “I wish I…” regretful feeling.

office 2013 cheep

Comments are closed.