Investment Myth 1 : Saving for retirement? Ah, I can do that later!
In early stages of our career, retirement planning like writing a will is probably the furthest thing from our thoughts. We try to channel our earnings to acquire latest gadgets, buy a smart car, get the largest mortgage our income would support, go on exotic holidays more than once a year. Saving for retirement is something that is rather low priority for most. While acquiring lifestyle items are important, it is also important for us to take necessary action to preserve our lifestyle post retirement.
It’s never too early to plan for retirement. On the contrary, the earlier you begin, the easier the task will be. Here is a mathematical fact, for every 5 years you up off starting to save your retirement, you reduce the income you could get by fifty percent in fancy terms known as the time value of money.
When you start early, the amount of investment required to build a substantial retirement savings pot is smaller than the amount required to make the same kitty if you delay retirement planning. Our earlier article, Retirement Planning – Start now, Save more, Retire rich, explains why starting early with your retirement planning is advantageous for you. Although such opportunites get rarer by the day, if there is an employer provided scheme available to you, join it. I came across a painful example just over a year ago, this lady who had worked for the same employer since she left school, but never joined the pension scheme because like young folk she was always of the feeling Ill not be here for very long, and in any event, theres no need to start thinking of retirement just now. If this lovely lady had joined the pension scheme at the earliest possible time, the could have got a retirement income of £6,000 a year, index linked, for the rest of her life she was only 50 years old. All that free money wasted.