Nearly every day someone asks us when is the right age and time to begin saving for retirement, and we always answer that only you can determine when the right age and time is to begin saving for your retirement. However, we’d still like to offer a little food for thought as you thinking about your own retirement plan.

The Age to Begin Saving for Retirement

Although only you can decide when to begin your retirement savings plan, there are traditionally three schools of thought.

1. Begin at Age 25

It is often recommended to begin saving during an adult’s early 20s. This is usually the time when most have graduated from college and have landed their first real job. With most professional jobs, a 401k retirement plan is offered, and it is recommended to pay into the 401K to begin your retirement savings. A benefit of beginning to save in your 20s is that you will be able to save for decades by the time you are ready to retire. This can mean more money to live off when the working years have passed.  To offer a solid example of beginning to save this early please read below:

Let’s say you are freshly graduated student who has landed your first full time job at the age of 25. If you begin putting roughly $2,000 each year into a retirement fund at an earnings rate of 8 percent, by the time you retired (40 years from now,) you would have approximately $560,000 saved to live off of as a retiree.  If you waited ten years from now and began to save for retirement at age 35, and if all variables were the same (same 8 percent earnings and same yearly amount invested,) by the time you saved for the 30 years until retirement at age 65, you would have only $245,000 saved up.

That is a considerable difference in living budgets for the rest of your life, further showcasing the need to begin saving  for retirement at an early age. Read this great post about how demographic impact your savings.

2. Save as Early as Possible

Other schools of thought when it comes to retirement savings can be to begin saving earlier than the age of 25. If you began working part time at the age of 16, you may want to consider investing some money into an IRA account to prepare you even more for retirement quite a few years down the road.

3. Get Your Ducks in a Row Before Thinking About Retirement

For other people, saving for retirement may not be an option at the moment. Whether you wish to save independently with an IRA or invest in a workplace 401k, some will suggest holding off until all your ducks are in a row. This can mean completing the following list of things before beginning to save for retirement.

• Have the financial ability to pay all bills and meet living necessities such as purchasing food and paying rent.
• Create and establish an emergency savings fund to cover emergencies like hospital stays, emergency room costs, or even the car breaking down.  Keep in mind there are penalties for removing retirement funds before retirement, so having money in an IRA or 401k is virtually useless in emergencies and that is why it is a good idea to have an emergency savings fund.
• And lastly, try to pay off all debts before beginning to save for retirement. Being out of debt before retirement can make your savings go further when you are living on retirement savings alone.

Preparing for the Future, Today

Only you can determine when is a good time to begin saving for your retirement. However, no matter the time and day you begin to save or the retirement plan you choose, it is always wise to begin preparing for the future, today.