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Why You Need to Start Planning for Your Future Now

Fri, 11/09/2012 - 4:26pm | by Guest Contributor

You’ve probably heard plenty of people say that you’re not getting any younger.  When you’re 20 or 30 it is easy to ignore this warning; you’ve got all the time in the world!  But once you hit 40 or 50 and begin to realize that retirement isn’t really that far off, it may be too late to start realistically planning for a future that used to seem so far away.  Another phrase, “time flies”, also applies to this scenario, so here are just a few reasons why now is a great time to start planning for your future, even if you’re fresh out of college.

For one thing, there are things you will want in life.  Beyond paying off your college loans, you’ll probably want to get married, have kids, and buy a house at some point.  These are pretty common life goals that unfortunately take money to attain.  Even going to a justice of the peace isn’t free, and a real wedding could cost you thousands of dollars.  Every child is slated to run you over $200,000 over the course of 18 years.  And a mortgage will set you back a pretty penny every month and require a down payment (although it should show a good return down the road).  Actually, your home purchase, while expensive, can actually be viewed as an investment in your future.  If you sell this high-ticket asset at the right time, it could help to bolster your retirement fund.

But there are other reasons (and other ways) to plan ahead.  Consider for a moment just what a compound interest account like a 401K or Roth IRA is really offering to you.  For starters, any contributions will be viewed as pre-taxable income, which means you can save a little bit on your tax filing each year.  In addition, you have to pay attention to the word “compound”.  This means that even the interest you earn on these accounts will earn you money, so that the longer you have money in the account, the more you stand to earn.  For example, a person who contributes monthly to a 401K between the ages of 20 and 30 (but then stops) will end up with the same sum upon retirement as a person who contributes the same monthly amount from the age of 40 until retirement.  By starting early you can earn a lot more with a much smaller investment.

However, there’s something you need to consider beyond the financial benefits of starting to save early, and that is the quality of life you want to have during your twilight years.  You’ll probably want to maintain a certain standard of living, at the very least, but suppose you face medical problems that lead to a string of hospitals or even Alzheimer’s care homes.  Do you really want your family to have to shell out for these costly institutions because you burned through your small savings too soon?  In short, a plan for the future protects you.  If you’re lucky enough to remain healthy and active, a well-planned retirement could give you the leisure to travel.  And if you happen to face a medical crisis, it could mean that you receive the best care.  So start planning now; you won’t regret it.

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