The time to think about retirement is now. It does not matter how old you are when you are reading this because as long as you are earning money it is time to think about your retirement. I know what you are going to say, and I agree with you, “Retirement seems so far away.” It is when you are twenty, even so when you are thirty, less so when you are sixty but regardless of your age retirement will come.
I sat down with a client a few days ago and he was talking about his job and how quickly it went by and when he retired in 1988 he said he had a long time for his retirement. Looking back he said that how quickly the last twenty-four years had gone by. I hate to get too scientific here but time ticks away the same for everyone what is different is our perception of it. As often happens when we are twenty we plan to tackle retirement in our thirties, in our thirties we then look to our forties and so on until we are 64 ½ and think to ourselves that it’s time to think about saving for retirement. I have heard it all from clients over the years. Statements like “I have time”, “I will start when I get all my debt paid down”, “I am going to win the lottery”, rich uncles and richer aunts will come out of the woodwork, “I’ll get to it” and the list goes on.
The problem is that debt does not go away overnight, that rich aunt or uncle never shows up and time just continues to tick away. I want to throw out a kernel of an idea to you to mull on. When you are young you have all the time in the world and your debt is usually higher and as you get older your debt slowly dwindles as does your time. If I am off base here let me know. You also are earning money when you are young and are spending it during retirement. My point is this: use the time that you have when you are younger to leverage a smaller amount of money to grow slowly over time to a large amount when you need it in retirement. Simple. This way you have time to make a plan and adjust it over the years to suit your needs.
There is none of that eleventh hour pressure looming over you to build up your money to the level that you desire. Worst case here is that you have time to build up half or even three-quarters of what you want with less risk than trying to hit the same amount with less time by increasing your risk to hit your goal. High risk in younger years allows for adjustments and recoup of losses, high risk in later years equates to lots of stress and no time to recoup losses or even make the proper adjustments to regain your footing. We change from high risk in early years to low risk in later years.
The way I see it is that when you save for retirement give yourself enough time and maintain a risk level that you feel comfortable with. Having half or three-quarters of what you need is better than starting late and having a quarter or nothing to go into retirement with. So I say again the time to think about retirement is now.