5 reasons why you should develop good financial habits early In Your Career

Jul 21st, 2016 | By | Category: Commentary

Jennifer Landon/Commentary

Jennifer Landon_Dec_2014_cropThe recent report from the U.S. Bureau of Labor Statistics showing Idaho leads the nation in job growth is great news for our state, its businesses and its workers. With jobs in hand, it might not be time for all of these new hires to start thinking about retiring, but it’s never too early for them to start thinking about saving for retirement.

Too often, people wait until the perfect time to begin a retirement savings plan. But when is the perfect time? People can talk themselves out of building a nest egg in much the same way they can talk themselves out of a diet or an exercise program.

The number of excuses used to delay retirement savings are endless, but some of the most frequent ones I hear are:

  •  I can’t afford to save
  •  I’ll start saving when I get a raise
  •  I’m too young (or too old) to start saving
  •  I’m scared I won’t get a return on my investment
  •  I have to pay for my… housing, car, kids, college—the list goes on and on

Those excuses for not saving might seem valid to the person saying them at the time they’re saying them, but when they get 5, 10 or even 50 years down the road and find themselves retired and staring at an empty nest egg, they’ll wish they had a time machine.

I mentioned diets and exercise programs earlier for a reason. You might eat right one day, but not the next. You might join a gym and go through a routine, but for one reason or another you get out of the habit.

Much of life’s successes are grounded in good habits. Saving for retirement is no different. I often tell young clients that financial success isn’t correlated with how much income they bring in, but rather a consequence of good financial habits, such as saving a portion of their income every time they are paid. The following are five reasons why people should start saving early:

1. Early retirement!

How long will we have to work? That is one of the great questions we ask ourselves. Saving early in a career, according to a recent survey by MoneyRates.com, has a huge impact on when people eventually retire. The study found that people who start saving in their 20s are 66 percent more likely to say they’ll reach retirement by age 60 than people who waited until their 30s to begin saving. Unfortunately, only 27 percent of respondents started saving for retirement in their 20s.

2. A hard habit to break

If you don’t start saving early in your career, who’s to say you’ll start later. Again, if you were waiting for that perfect moment to begin saving, who’s to say that will occur in your 30s or 40s, once you have the additional burdens of a mortgage, a marriage, kids, or possibly even caring for your aging parents? Once the habit of not saving is ingrained it will become more and more difficult to take money out of that paycheck.

3. The power of compounding returns

In a perfect world, saving for retirement would be a given. As I’ve discussed, it’s not always that simple. Life happens. Jobs come and jobs go. Other personal situations hit, offering roadblocks to saving for later, but if possible: Save! The effects of compounding interests over several decades is staggering, and, the earlier you start, the better your chances will be of reaching your financial goals.

4. Shrinking Social Security

For decades, retirees had a given, that government systems such as Social Security would be there to provide a financial comfort for them in their golden years. There simply are too many questions surrounding the various welfare systems and their viability in the future and we are living too long in retirement to let that be your main safety net. While there’s nothing wrong with using Social Security in retirement, do you want to depend on it to see you through a retirement that could last 30 years or more?

5.  Late retirement!

You might want to keep working well into your 70s or even your 80s. But if you do choose to extend your working years, don’t you want to be in control of that choice? According to the MoneyRates.com study, only 52.5 percent of those who put off saving until their 50s expect to be able to retire by the time they reach 70. And, more than 25 percent of those late starters didn’t know if they would ever be able to retire.

As you begin a new job or even a first job, it’s important to remember that every paycheck counts. The earlier you begin saving for retirement, the earlier your money begins to work for you, and the earlier you may be able to retire. If that’s what you want to do.

About Jennifer Landon, Southeast Idaho’s Financial Educator

Jennifer Landon, founder and president of Journey Financial Services, is an accomplished advisor, educator and presenter on financial topics. Landon has spent the last decade advising Idaho Falls residents on the wealth and retirement planning strategies needed to help them achieve peace of mind on their retirement journey. She is an Investment Advisor Representative and a licensed life and health insurance professional in the state of Idaho. Landon is a member of Ed Slott’s Master Elite IRA Advisor Group, the National Ethics Association (NEA) and the Better Business Bureau. For more information about Jennifer Landon and Journey Financial Services, please call (208) 552-9169 or visit www.JourneyRetirement.com.

Jennifer Landon is an Investment Advisor Representative with Allegis Investment Advisors LLC, a SEC Registered Investment Advisor. 2410 E 25th Circle, Idaho Falls ID 83404.

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