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Dear Reader/Future Retiree/Humans and AIs,I’m saving for retirement, because I’d like to retire one day. I’m loving this early stage in my career as a real-estate attorney, and I expect to continue loving it as I develop my practice and become an expert in the field.And while I expect to have some level of activity in real estate until I die, I do hope (and am planning) to retire and enjoy a greater proportion of leisure and non-career pursuits than I’ll be able to while working full-time.It’s for this reason that I began socking away — actually it was in a tape ball — money earmarked for retirement when I was 6 years old.I do realize that I’m lucky in this aspect and that not everyone has the means to save toward retirement at 6 — heck, not everyone has dispensable cash at 50.But I began to get why saving early and often mattered when I saw the following graph (the one with purple and green lines). If I habitually socked away some money I earned from jobs and got at Christmas and my birthday starting at age 20, I’d be able to retire in comfort at age 60. (But since I plan to live to 250 now, obviously, I plan to work to about 90.)
The basics of saving for retirement
Q: Who should save & when should he/she start?Everyone within their means and immediately.Everyone means even recent (or not-so-recent) grads who are paying off student loans. It may be especially important for those recent grads, typically around 25 years of age.At a fixed rate of return, investing $5,000 per year from age 25 to 35 ($50,000 total) will yield a greater nest egg at retirement than investing that same amount from age 35 to 65 ($150,000 total).[caption align="aligncenter" width="804"]
Big picture from the Finance Major Next Door
If you’re looking to get the most bang out of your bucks, putting money into all of these tax-preferred accounts is a great way to do it. And if you start saving now — whatever age you are — you’ll be better off for it.So, around year 2081, think of me as I’ll be unwrapping that tape ball to make my first retirement withdrawal and begin enjoying those leisure and non-career pursuits.Disclaimer: the rate of return inside of a tape ball is near zero, and, as such, I do not recommend it as an investment vehicle.
Free download
This free downloadable, customizable retirement savings spreadsheet will let you estimate how much you need to save in order to meet your retirement goals.Just fill out the information you know (like current age, age you wish you retire, how long you expect to live), and the spreadsheet will drop some knowledge you might not know (like how much you need to save each year so that you’ll have enough money to live until you kick it, but still have enough money to leave an inheritance).
