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When Should You Start Saving for Retirement?

Finance & Money

Posted on Friday, July 2, 2021

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Not sure when to start saving for retirement?Clichéd as it may sound, the phrase ‘sooner rather than later’ applies even in the case of retirement savings, regardless of age. Yes, you can never be too young to begin the process of building financial security for your future! With these tips, you should be able to take the small but very necessary steps towards saving for your retirement. 

How do you calculate your retirement funds?

 

You can get an estimate of how much you’ll need by using free online retirement calculators. There’s no harm in being proactive and doing a bit of research, but keep in mind that this is not the final step and that it is always advised to seek guidance from financial professionals and specialists.

 

Don’t cash out your funds!

 

When you’ve resigned from your place of work because you’ve received a new offer, it can be tempting to tap into your retirement funds, which you’ve built over the years. Avoid it by all means! Yes, you’re starting a new job with a better salary, but that doesn’t mean you need to start over with your savings as well. Remember, your retirement funds are for the future. Should you decide to go ahead and cash out, this is what you need to consider:

 

  • the heavy taxation that comes with cashing out your retirement fund
  • the amount you could earn or lose in compound interest
  • what other options are available, if you’re using the money to pay off debts
  • sitting with a financial planner and looking at the bigger picture – they will pick up on things you’re not aware of

 

Investing your retirement funds wisely

 

Ultimately, the three main aims of investing your retirement funds are:

 

  • to keep your savings safe so that they are available when you need access to them
  • to grow your money so that you not only meet your needs, but also go beyond them
  • to invest in ways that will not eat into your profits (taxes and fees)

 

To get to these stages of your saving and investment journey, you need to have a plan of action. Here are some tips on how to invest wisely for retirement:

 

  • Before you start investing for your retirement, pay off your debts so you have less to worry about when retired.
  • You must save in order to invest and maintain your investments.
  • Invest in products that you have an understanding of.
  • Figure out your comfort level for taking risk – how much money you’re willing to invest as well as where and how you want to invest it.

 

 

Whether you are a seasoned professional or just starting out in your career, there is no better time than now to start building your future wealth, so let’s get going!

 

The information in this article is for information purposes only and does not constitute professional advice.

 

References

 

  1. https://www.oldmutual.co.za/articles/when-should-i-start-thinking-about-my-retirement
  2. https://www.sanlam.co.za/tools/Pages/retirement.aspx
  3. https://www.sanlam.co.za/personal/retirement/navigateretirement/articles/Pages/5-things-to-consider-before-cashing-in-your-pension-fund.aspx
  4. https://businesstech.co.za/news/finance/440157/what-you-should-know-before-cashing-out-your-pension-in-south-africa-and-what-it-will-cost-you/

https://www.nolo.com/legal-encyclopedia/how-invest-wisely-retirement-29625.html