Retirement Planning – Starting Early

There are several benefits to starting early in your retirement planning and saving.

  1. The earlier you start saving, the more time your money has to grow due to compound earnings. For example, putting $250 a month in your mattress or in your safe deposit box over 30 years would yield about $90,000; however, stick that amount in an investment yielding just 4 percent (4.06% APY), and you’ll see more than $173,000 at the end of your 30 years. That’s almost twice the amount invested. At 6 percent (6.14% APY), you’ll have more than $250,000. That’s because your money is working for you. Compounding means that your interest is earning interest. Quickly determine if your retirement plan is on track – and learn how to keep it there.
  2. Waiting just a few years will end up causing you to forfeit more earnings than you may think. For example, if you invested $250 every month for 35 years in an account earning 4 percent (4.06% APY), you would have more than $228,000. Wait just five years to start investing $250 every month, and you’ll end up with just over $173,000. That’s a $55,000 difference with only $15,000 of that being principal ($250 a month times 12 months times five years), leaving $40,000 of earnings just in interest for starting your retirement planning just five years earlier.
  3. Starting early also gives you more time to plan and added flexibility. Are you having trouble getting started because you think you cannot afford to set aside money for retirement? Here are some helpful hints for finding that extra money for retirement.
    • Use tax refunds. Don’t spend it, invest it in your retirement. If you get a refund each year, you are probably having too much tax deducted. Reduce your withholding and increase your retirement account contribution.
    • Use raises. Raises make a great one-time contribution. Make a commitment to put the extra money into a retirement account.
    • Use former loan payments. If you’ve been making payments to a loan, you are used to setting aside that money and living without it. Once the loan is paid off, use this money for a contribution to your retirement plan each month. A good way to do this is to set up a systematic withdrawal from your checking or savings account into an Individual Retirement Account (IRA)

APYs (Annual Percentage Yields) are based on interest compounding quarterly, no withdrawals and a fixed rate of interest. Rates are hypothetical and may not be currently available.  Depending on the account type used, fees may reduce earnings, a minimum balance may be required and/or an early withdrawal penalty may be imposed.

The information provided in this page is not intended to be legal or tax advice.  You should consult your attorney or tax advisor for information that relates to your specific circumstances.

Fees may reduce earnings on checking and savings accounts.  $25 minimum opening deposit on IRAs. A penalty may be imposed for early withdrawal.

Product descriptions herein do not take the place of required disclosures under federal and state regulations.  Please contact us for disclosures appropriate to these accounts.” for consistency purposes.