When should one start saving for retirement?


I spend a lot of my time helping people plan for retirement that they hope to start in five to 10 years, and of course much of my time helping those who have already entered into their retirement years. Unfortunately, I don’t get the opportunity to talk to many younger people about the subject of retirement planning. One reason is that very few people in their 20s, 30s or even 40s spend any time thinking about retirement; they are just too busy with all of the other day-to-day things, both positive and negative, that they face.

Another reason is that there is a prevailing opinion that you don’t need to think about planning for retirement until you are in your 50s, maybe even later. That’s just not smart planning.

Those in their 20s and 30s today may have to accumulate $2 million or more (depending on their lifestyle during retirement years) to retire in the future. This is due to a) the failure of Social Security to keep up with inflation, b) longer life spans, c) the disappearance of defined benefit pension plans, and d) the ever-rising cost of health care. How can someone in their 20s or 30s today ever accumulate $2 million? By starting to save right away and never stopping; let compounding do most of the saving for you.

Let me share an example. If you save a dollar at age 20, your employer matches your contribution at 50 percent and your savings of $1.50 earns a 6 percent average annual return, you will have $48 at age 65. However, if you wait until age 40 to save, you will need to save $4 plus the employer’s $2 match – or a total of $6 – to have the same $48 at age 65. That is four times as much of your money to get the same result! I tell people all the time that the trick to accumulating a retirement nest egg is to make compounding work for you so the portion of the savings that represents your contributions is small and the portion representing earnings on your contributions is large.

I understand that saving is hard, particularly when you have student loan debt to pay off, house payments and the cost of raising children to tackle. I get it. That $2 million target isn’t going to go away, however, and as many older adults will tell you, 30 or 40 years can go by quicker than you can imagine. So, whether you are the younger one who needs to start planning for your future or you have kids or grandkids that are, consider this seriously and develop a plan today.

Frederic “Ric” Schilling is a Florida native, born in Jacksonville, Fl. Ric is President of Senior Guardians of America, a local North Florida firm specializing in tax reduction, long term illness planning, asset protection, probate avoidance and life income planning. Ric is a National Speaker and Advocate on Senior Issues and has been featured by the Florida Times Union and WJXT, TV-4 in Jacksonville as an authority on Estate Planning and Retirement Issues. Senior Guardians has an A+ rating with the Better Business Bureau and is a member in excellent standing with the National Ethics Association. Contact Frederic: 904-371-3302 or 888-891-3381 Please visit: www.seniorguardian.comThis article is not intended to give tax or legal advice. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer and Member of FINRA & SIPC. Senior Guardians is independent of CSS.