Our country has a saving problem. From socking away money for the down payment on a home to enacting a retirement savings plan, most Americans are failing to properly prepare for their financial futures. America’s Retirement Plan is here to turn the tide of inadequate savings for all of our clients. Our team has worked diligently for more than two decades to create long-term investment strategies that hold a long track record of success. Our retirement planning tools deliver clear, engaging results for anyone looking for relatively safe investment options that benefit from online shopping rebates and automatic payroll deductions. Contact us today to learn more about the benefits of our retirement planning services and to get the process started. The earlier you start, the stronger your financial independence will be once you retire. Today, we’ll look at the benefits of starting your retirement savings early, as well some tips to help promote more growth during the early stages. One great way to start is to contact America’s Retirement Plan for professional help!
Compounding is Key
When people say they are putting their money to work, it generally implies that they are using their monetary funds to acquire more income. From a savings standpoint, compound interest is the key to success. Unlike simple interest, which provides you with additional money based on the original principal, compound interest pays you based on your principal plus the interest you accumulated previously. The more money that is put into an account, the more power it has for generating wealth. If you save $10,000 dollars at a 5 percent interest rate, for example, you would accrue 500 dollars in the first year. The next year, this combined amount would earn interest that would generate another 500 plus 25 for the previous year’s accruement. In year three, you would earn just over 50 more on top of the original 500 dollars. With no additional deposits into your account, you’ve accumulated over $1,500 dollars without lifting a finger.
Compounding with our retirement planning software is also useful for those who bring friends into the responsible savings loop. When you use our partner NvestBates, you’ll be able to earn compounding returns on your cash rebates via online shopping. Coupling this with the compounding interest of a retirement savings account can prove to be a very successful venture!
The essence of beginning your retirement planning early revolves around the concept that the longer you wait, the harder things will be. As we have said, the longer your savings has to compound interest, the more earning potential you will have. One helpful chart illuminates the issue of waiting with an example where a person makes $30,000 a year and plans on hosting their retirement party in 30 years. When you take a four percent contribution into saves with an eight percent annual return, the end sum totals just under $221,000. If you decided to wait five years (giving you 25 years to save), your sum on retirement would equate to nearly $165,000. At this rate, you are essentially missing out on roughly $10,000 a year on average.
Younger citizens tend to make less money across the board when compared to their more senior counterparts. Preparing for retirement early can be difficult to manage, which is why it’s key to utilize one or more strategies. One method that has proven to be effective is to dedicate a chunk of any wage increases you earn throughout your life. While it can be difficult to practice responsible spending once those larger checks start coming it, the action will prove to be a major benefit once you are nearing retirement. If your employer gave you four dollar per hour raise, for example, you can optimize the savings plan by putting half of that raise into a savings account. Saving two dollars per hour equates to $4,160 dollars a year for a standard work week. While taxes may be assessed to this gross income amount, the result is more saving potential.
Remember that compounding interest on $10,000? You can reach that amount in less than three years, giving you an additional $1,500 in interest during a three-year period. When you add in the additional money from your pay raise annually, the numbers begin to really gain momentum. If you receive another raise in the future, remember to practice discipline in saving your income. Once the retirement party ends, you’ll be glad that you did!
There are numerous ways to save for retirement. Finding the best course of doing so depends on your plans, income, and strategy. America’s Retirement Plan is here to help you every step of the way! Our dedicated team of professionals will work hard to put your money to work, earning lucrative gains, even while you sleep! Our retirement planning tools help make saving and investing easier than ever before. If you are curious about our system and want to get a jump on your retirement savings plan, feel free to contact us today!