Yes — You Really Should be Saving for Retirement in Your 20s
Start writing a post
Student Life

Yes — You Really Should be Saving for Retirement in Your 20s

You Have Nothing But Time - To Accrue Interest

317
Yes — You Really Should be Saving for Retirement in Your 20s
https://www.pexels.com/photo/blur-cash-close-up-dollars-545065/

Your 20s are a huge time of change. Not only are you leaving academia behind for the real world, but you’re renting and buying properties, traveling, moving and maybe even getting married.

As you focus on the major milestones that lie directly ahead, you might lose focus on the ones way down the line. One huge accomplishment in your life will be retirement, and while it may seem like a faraway finish line, it’s one you should start thinking about now — yes, now.

Here are three huge reasons why saving in your 20s will pay off in dividends — quite literally — when it’s time to retire. We promise, you’ll be glad you started now.

1. You Have Nothing but Time — to Accrue Interest

When you start putting money away in your 20s, it will remain untouched on your end, but it won’t remain stagnant in value. That’s because it will accrue interest each year, adding more and more value to the initial amount you saved.

Imagine you started out with a savings of $1,000, to which your bank will apply a 4 percent interest rate. After one year, the amount in your account will be $1,040. It may not seem like a lot of growth, but your interest rate will continue to apply to the growing amount of funds in your account. So, at the end of the second year, you’ll have $1,081.60, 4 percent interest of your original investment, plus interest.

This growth could be even larger if you invest your money outside of your bank. And, if you do so in your 20s, you’ll give your investment even more time to grow and earn tens or hundreds of thousands of dollars in interest.

2. Your Efforts Mean More When You Make Them Sooner

You might be looking at your list of expenses and thinking, “There’s no way I can save hundreds of dollars each month when I have this much to pay for.” Between rent, student loans, gas for your car and everything in between, it might seem smart to put off saving until you’ve got these expenses under control.

But even a small amount you set aside each month in your 20s is worth so much more than larger amounts you might save later on. For example, if you save $100 a month for 40 years with a 12 percent interest rate, you would retire with almost $1.2 million in the bank. Someone saving $1,000 a month for 10 years, on the other hand, would have slightly more than one-sixth of that amount, around $230,000.

With that much padding in your account, you’ll be able to ensure you lead a comfortable life in retirement. Aside from housing in a development tailored to retired residents, you could travel, take care of your health and not worry about where the money was coming from.

3. You Can Make Even More Free Money

In a way, interest is free money. But starting to save in your 20s means you can take advantage of workplace benefits that are designed to build your retirement fund — benefits many 20-somethings don’t use to their advantage.

The best example of this is a 401K matching program. Not every employer offers this benefit, but they’re an incredible way to build and grow your retirement fund. That’s because your employer will literally match the amount of money you put into your account each month for free. And, one day, when you retire, you’ll have access to all that money — plus interest.

All this may be hard to envision now as you’re just entering into bona fide adulthood. But saving for retirement now is smart and will reap you huge rewards. Like we said before, we promise you’ll be glad you started early — all you have left to do now is save.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
a man and a woman sitting on the beach in front of the sunset

Whether you met your new love interest online, through mutual friends, or another way entirely, you'll definitely want to know what you're getting into. I mean, really, what's the point in entering a relationship with someone if you don't know whether or not you're compatible on a very basic level?

Consider these 21 questions to ask in the talking stage when getting to know that new guy or girl you just started talking to:

Keep Reading...Show less
Lifestyle

Challah vs. Easter Bread: A Delicious Dilemma

Is there really such a difference in Challah bread or Easter Bread?

9047
loaves of challah and easter bread stacked up aside each other, an abundance of food in baskets
StableDiffusion

Ever since I could remember, it was a treat to receive Easter Bread made by my grandmother. We would only have it once a year and the wait was excruciating. Now that my grandmother has gotten older, she has stopped baking a lot of her recipes that require a lot of hand usage--her traditional Italian baking means no machines. So for the past few years, I have missed enjoying my Easter Bread.

Keep Reading...Show less
Adulting

Unlocking Lake People's Secrets: 15 Must-Knows!

There's no other place you'd rather be in the summer.

941537
Group of joyful friends sitting in a boat
Haley Harvey

The people that spend their summers at the lake are a unique group of people.

Whether you grew up going to the lake, have only recently started going, or have only been once or twice, you know it takes a certain kind of person to be a lake person. To the long-time lake people, the lake holds a special place in your heart, no matter how dirty the water may look.

Keep Reading...Show less
Student Life

Top 10 Reasons My School Rocks!

Why I Chose a Small School Over a Big University.

118140
man in black long sleeve shirt and black pants walking on white concrete pathway

I was asked so many times why I wanted to go to a small school when a big university is so much better. Don't get me wrong, I'm sure a big university is great but I absolutely love going to a small school. I know that I miss out on big sporting events and having people actually know where it is. I can't even count how many times I've been asked where it is and I know they won't know so I just say "somewhere in the middle of Wisconsin." But, I get to know most people at my school and I know my professors very well. Not to mention, being able to walk to the other side of campus in 5 minutes at a casual walking pace. I am so happy I made the decision to go to school where I did. I love my school and these are just a few reasons why.

Keep Reading...Show less
Lots of people sat on the cinema wearing 3D glasses
Pinterest

Ever wonder what your friend meant when they started babbling about you taking their stapler? Or how whenever you ask your friend for a favor they respond with "As You Wish?" Are you looking for new and creative ways to insult your friends?

Well, look no further. Here is a list of 70 of the most quotable movies of all time. Here you will find answers to your questions along with a multitude of other things such as; new insults for your friends, interesting characters, fantastic story lines, and of course quotes to log into your mind for future use.

Keep Reading...Show less

Subscribe to Our Newsletter

Facebook Comments