Retirement: Reasons to Start Saving Now.
“I am young, energetic and I’m living life to the fullest now… ”
might be the excuse that played in your mind when you saw the headline, but you
clicked it anyway so your heart is still in a pretty good place!
Some young wonderful minds think “being forever young” is a
given and that although no one lives forever, there is more than enough time to
think about the future when the future starts to matter. This is the illusion
of time playing games with your mind because before you know it, you will look
back to see that twenty years have just walked right in front of you without
you doing anything about it. A Chinese proverb which we should all be familiar
with and which I have grown to love goes thus: ‘The best time to plant a tree
was 20 years ago. The second best time is now.’
Why should this retirement tree should be planted now, you might
ask. We have seven reasons here to persuade you to start planning for your
retirement NOW!
1. Financially
secured future: The exact amount you would need for a financially secure future
is quite hard to predict and if you look forward to living a well-rounded life,
you would want that life to be lived in a healthy and safe manner. In this
case, the last thing you want to worry about during these golden old years of
your life is money after you are years out of work.
2. Pay
Yourself First: Many think that spending their monthly salary is what living a
large life is all about. It is quite the opposite. Think of it this way. Let’s
say you are paid N100, 000 monthly and you spend N70, 000 out of it every
month. You would have had a wonderful experience spending, but you have in
reality just paid others your money because what is left that belongs to you is
N30, 000. In reality, expenses never reduce because you realize that next
month, you will spend more than you spent last month, reducing the amount that
really belongs to you. See the savings culture as you paying yourself first and
don’t pay yourself a minute amount of 5% because you deserve more than that.
Start with 20% of your monthly salary and see how much you would have paid
yourself in a year.
3. Financial
discipline: Financial discipline will be a great addition to you in the long
run. Planting your retirement tree will allow you to reduce your expenses
according to your needs and according to’ priority levels, increasing your
chances of a better future.
4. Starting
early is not too early: Take for instance that at the age of 25, you start
saving up an amount of N25,000 monthly for your retirement. Many might consider
this age too early, but compare this wise chap/lady to someone who starts
saving up for retirement at the age of 35 with the same amount at the same
monthly pace, and you’ll discover that for both of them at the age of 70,
starting early is a wise choice. In order for the person at the age of 35 to
catch up in savings with the person at the age of 25, he/she will have to save
more. So for your desired future, starting early is not too early.
5. Responsibility
to posterity: It is your responsibility to make sure that beyond the education,
you can offer those coming behind you the choice of a secured future too. It
means at your old age, you should be able to give or assist your offspring in
any way they require and not have them run away from you because of your
demands for money. Knowing that those you will leave behind are secure because
of the wise choices you made at a very young age will make your old age more
fulfilling.
6. Early
retirement: If you start saving for your retirement early, you can make the
decision to retire early. However, to retire early you would need to increase
your level of savings from our proposed 20% to 40 – 50%. Don’t exclaim! You can
do this with your newly acquired financial discipline!
7. The
power of compounding: It is advisable that you do not plan for your retirement
only by saving into a simple savings accounts with the bank. There are so many
savings options like the pension plan offered by some notable insurance
companies, and savings plans with compound interest with some notable banks.
What these savings options have in common is their compound interests, which
serve as an icing on your savings cake to encourage your savings culture. If
you are the more financially aware, risk taking kind of person, you can go into
buying shares and selling bonds of different kinds. Just make sure that you are
well informed about what applies and what does not.
When you look back at the
years you have spent and the grand retirement you have planned for yourself, it
is a win-win situation for you. So get ready and start saving!
Remember: “It’s by managing your
finances that you write the story of your life. You are both the author and the
story’s principal character. Resolve to perform what you ought.” – Benjamin
Franklin
Comments
Post a comment