Am I too young to save for retirement?
Financial experts recommend that the best time to start saving for retirement is when you receive your first pay cheque. But how many people really follow this advice? Unfortunately, very few do.
Why would a young person, fresh from landing a job and armed with the returns of his or her hard work, not choose to put away some of this money for such an important time of life?
Twenty-two year old Marcia, a recent graduate of a local university, explains how she learned about the value of saving early for retirement:
In my final year of university, there was a career day on campus and a representative of a financial institution gave a presentation on retirement planning. I remember thinking that there was no way that I could make plans for an event so far away in the future. In fact, I figured that I probably would not earn enough to meet my current needs and be able to put aside money for retirement so early in my career.
One of my first priorities after graduating and getting employed was to start repaying my student loan. Luckily, my income also afforded me to move out of my parents cramped house and rent a small apartment of my own. I was so happy that I finally had my own money to spend exactly the way I wanted to.
In the course of my job, I interact with a lot of very influential clients. One of them, Mrs. Johnson, a stylish lady in her early sixties, really impressed me with her lifestyle. She seemed to be so carefree about money, traveling all around the world and always dressing in the latest fashions.
I decided that when I got to that age, I wanted to be able to live just like Mrs. Johnson; so one day I asked her about the secret to her success. She was very willing to share her story with me.
Mrs. Johnson explained that she came from very humble beginnings, but she was determined to work hard to change her financial status. She realised that in order to start building her wealth, she would have to start saving very early.
She recalled that the first time she got paid, the money was so small that she wondered if it really made sense to put away any of it. However, she persevered and opened her tiny savings account. Mrs. Johnson revealed that as her income grew, she always increased her saving amounts; and over time she also learned how to invest her money wisely.
Mrs. Johnson confessed to me that she would not have been able to retire at 55 and attain her current lifestyle, had she not chosen to adopt a disciplined savings habit at an early age.
After speaking with Mrs. Johnson, I immediately decided to reconsider the idea of retirement planning. I checked out the retirement calculator on the Scotia Insurance website and I couldn't believe how easy it would be to build a large nest egg with just a small amount of savings.