Retirement may seem like a distant and abstract concept for many people, especially those who are just starting their careers. With student loans, rent, and other expenses, saving for retirement may not be a priority. However, the truth is that the earlier you start saving for retirement, the better off you will be in the long run.
One of the main benefits of starting to save for retirement early is the power of compounding interest. Compounding interest is when the interest earned on your savings is added to the principal amount, allowing you to earn interest on interest. This may not seem like a big deal in the short term, but over the course of several decades, it can make a significant difference in your retirement savings. For example, someone who starts saving for retirement at age 25 and contributes $500 per month until age 65, with an average annual return of 8%, would have almost double the amount saved compared to someone who starts saving at age 35. This is due to the power of compounding interest.
In addition to the financial benefits, starting to save for retirement early also allows you to develop good saving habits and be prepared for unexpected events. By starting early, you will have a longer time horizon to plan and adjust your retirement goals and take into account any unexpected financial setbacks. It also gives you the opportunity to learn about different retirement savings