If you’re just starting your career, it’s hard to imagine retiring. Retirement may be a long way off, but saving early offers tremendous advantages. Early retirement planning provides the benefits of time in the stock market, compound growth, and disciplined savings – all of which can lead to greater financial freedom, flexibility and security.

You can accelerate the savings process by participating in 401(k) and/or 403(b) retirement plans at your workplace. These plans provide tax-deferral and potential employer matching contributions that can boost accumulated savings for greater financial wellness. Automatic payroll deductions make it easy and convenient to save and encourage a consistent program of investing with a “pay yourself first” mentality. 

Smart money moves to make now   

If planning early for retirement is on your to-do list, here are three smart moves to consider: 

#1. Don’t delay – start saving immediately 

The sooner you start, the longer your money compounds. Thanks to compounding, your initial investment earns money, and your earnings also generate earnings. Over time, there’s a “snowball effect” and growth accelerates.  

Saving smaller amounts in your 20s and 30s can be worth far more at retirement age than saving larger amount in mid-life. By leveraging time, you allow your money to work harder, so you can save a smaller percentage of your monthly income to achieve your retirement goal.  

2. Enroll in 401(k) and 403(b) plans

Wondering where to save? Participate in your employer’s 401(k) and/or 403(b) plans by having contributions deducted automatically from your paycheck. These plans are designed specifically for retirement savings and allow your contributions to grow tax deferred. There are no annual taxes on your account earnings, which means all your money compounds until it’s withdrawn. As a result, your savings grow faster than they would in a comparable taxable vehicle.

Depending on your salary and budget, your initial contributions may be small. If possible, try to contribute enough to get the full employer match. This is money the employer puts into your 401(k) and or 403(b) account. The match typically equals a certain dollar amount or percentage of your contributions. Consider it “free money” that’s an instant return on your savings and an opportunity you don’t want to miss.

#3. Adopt smart savings habits  

Put saving on autopilot, so that it’s not reliant on your willpower. Sign up for automatic payroll deductions and opt for automatic contribution increases with every raise or promotion. With a “set it and forget it” strategy, you won’t be tempted to spend the money you should be saving.  

Remember to manage your account by reviewing your financial goals and account balance each year.  Check to see that you’re on track, and if not, adjust.  

It’s important to remember that your long-term savings strategy may use retirement as a goalpost, but it’s about much more than that. Pursuing and achieving financial wellness opens the door to new possibilities and provides peace of mind throughout your entire life journey. Your future self will thank you for your smart approach to saving. 

Learn more about how Daybright can help you save for retirement.

This post is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

• Category: News
• Tag: Private Sector Retirement, Public Sector Retirement