What Age Should You Start Thinking About Retirement?

It is hardly a thought about saving for retirement when you are young, especially under 30 years old. The thought of being 65 years old is not a reality to anyone that young. However, once you are in your 30s and 40s and you start to experience those unexplainable pains in your legs or your side, you begin to realize that maybe, just maybe, you are aging. You also face the reality when your parents reach the age of 62 and 65 years old, respectively, and you likely aren't far behind, especially if they had you in their 30s and 40s.

At 18 or even 25, thinking about retirement already may seem like its too early. You've just begun your life. You've just started college or even graduated college, or just bought your first car, or just moved into your first apartment, so why would retirement even be on your mind? Why should it be on your mind? The truth is: you should expect to live long enough and beyond to retire. Even though we live in a world plagued with COVID-19, the statistics are still pretty good on your survival up until at least the age of 75 to 78 years old. If you're lucky, you can even look forward to 80 and 85 years old.

Part of you is absolutely correct to think that starting to save for retirement at 18 or 25 is too young. However, the interesting thing is that you probably like to prepare for a lot of things ahead of time. If you've been out on some dates, you usually plan for those. If you've had a child, you may plan what you're going to do with your kid that day or the week. You may even go shopping and plan your meals for you and your family for the week. So what makes planning for retirement so different?

Technically, I had started saving for retirement at age 18, but it did not truly register that money I was saving was always intended for some of my retirement in my life. When I turned 18, and I'm sorry to warn you in advance, but this type of deal is no longer offered and will never be available from greedy banks or the regulations of the government ever again, but at that age, there was an option to put my money into a CD at 5% interest. This means I had to lock away money I had saved from my Bar Mitz Vah and all of my work up until that age since I started working at 15 years old.

The amount was $5,000 that I locked away for 5 years at 5% which gave me about $60 per month in interest. I had not realized it at the time, but it was amazing. For 5 years, while that money was locked away, at $60 per month, when it finally matured, I had a total of about $8,600 minus whatever additional fees they took, which probably meant I took home around $8,300. Not bad for a 23 year old. I used that money to pay for my college tuition and buy a 1994 Camaro. It was amazing for a 23 year old.

At age 25, I decided it was time to start investing in the stock market. I wish I chose Google and Amazon at the time, but instead, it was Ford and Intel. The difference of being a millionaire vs. having to continue working, but we all make choices and live with them. It is what is but since then, I've owned little chunks of Google and Amazon and making money on those, selling them when the profit was right. At age twenty five is probably the perfect time to start putting a few hundred dollars into the stock market or putting money down on a real estate property as your first home and later possibly an investment property. At that age, those two options are your best hope to start saving for retirement.

If you manage to land a corporate office job, you'll likely be offered a 401k with up to a 3% to 6% company match on the first 50% to 100% that you contribute. If this is available to you, then do your best to reach 3% or 6% in contributions, which means the company will match your contributions. For about a year or two, when I had my bills paid and no debt, I was putting anywhere from 20% to 35% of my paycheck into my 401k. This wasn't impossible, but it certainly got harder when I took on a mortgage and had to do some home improvements. I had to decrease my annual contributions but usually make a great faith effort to put at least 10% of each paycheck towards my 401k.

In estimating how much I saved for retirement by doing that, after accruing interest for the next 30 years, it is probably very likely that I've saved several years of my current salary, which I've grown comfortable living on up to this point, for my retirement. While you do not have to go to the extreme of putting away 20% to 35% of your paycheck, you should aim for the goal of putting away at least 10% of your paycheck for your older self. In doing so, combined with social security, you will likely enjoy a comfortable retirement.

Why push to save for retirement at a younger age?

Life happens. For many people, they may have children between the ages of 18-25 years old, thus putting more money towards their children than themselves. For the average couple, they are usually having children between 25-35 years old and were able to put that money away from 18-25 years old. Once a child is born, a majority of the money in your paycheck will go towards paying for your family, or more specifically, your children. Add multiple children into the mix and most of your paycheck is spent on children, foregoing spending money on yourself and your older self for retirement.

Consider the fact that the average cost to raise a child from infancy to adulthood is $250,000, give or take a few thousand. If you add marriage into the mix along with a divorce later on, a house, mortgage, and the costs of extracurricular activities, potential private school, and university costs for your child, etc., meaning life can get pretty expensive very quickly. So why push to save for retirement for a younger age? Because at a younger age, you have no debt and no major commitment to your life. The sooner you can begin to think about your older self and even be in that mindset, the better off you'll actually be.

When you have a family, you'll do anything for them. You'll try to save money for your children's education and make sure they have the best years of their life. You may even choose to splurge on your own honeymoon and enjoy your time with your wife in the "before the children" phase, which might include cruises, vacations, weekend getaways, etc. For every year you put off saving for your 62 or 65 year old self is another year that you are putting everyone before you. This is healthy to an extent, but you should not forget about you and your needs. As I've learned myself: in the end, it is you who must take care of yourself.

If you are lucky enough to have someone else care about you enough to take care of you, than great. But bringing you back to reality, especially if you are a man, the chances of someone doing that for you are very slim. You'll end up having pull whatever money you have, whatever social security you are granted, whatever you have done with your life, to help yourself do what you need to do to continue living and surviving in the world. So for once, please believe me when I tell you, let the younger you start taking care of the older you. Your older self cannot tell you how or when to do this. Only you, right now, before you reach that age, and hopefully the 20 to 30 year old you, can understand why it is so dire that you begin caring about the older you long before it is necessary to do so.

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