Retirement Goals: Why Bother Saving?

The sooner you start saving, the better your chances of reaching your goals.

Here’s the truth: if you’re relatively young and you’re already saving for your retirement, you’re an outlier. You’re also on your way to a more comfortable retirement. But if you’re anything like the rest of us, you’re probably wondering why you should bother saving for your retirement goals when there are so many other good things to spend the money on now. Won’t the future sort itself out? In a word, no.

Five reasons why saving early for retirement makes sense:

  1. You may live quite a long time in retirement. Longer than you expect, in fact. If you’re one of the many people who underestimate how long you’ll live in retirement, you may find yourself running out of money.

  2. Some people find that their expenses decrease in retirement — their house is paid off and children have moved away. But many others find that their dreams for retirement come with big price tags. Depending on your retirement goals, you may need a minimum of 70 to 80 percent of your pre-retirement income.

  3. Your City pension may not cover all your retirement expenses. The rest will need to come from other sources, like personal savings and the Deferred Compensation Plan.

  4. Inflation may take a bite out of your retirement savings. Remember your dollar may buy a lot less in the future than it does today.

  5. You can take advantage of the Deferred Compensation Plan now, which makes it super easy to save.

Here are some other great reasons to invest in the Deferred Compensation Plan:

  • The Plan offers a variety of investment options managed by experienced professionals.

  • You can save automatically. Simply specify how much, and the amount will be automatically deducted from your paycheck and deposited to your plan account — before you ever see the funds. 

  • Your contributions reduce your current taxes. Because your contributions are made with pre-tax money, you reduce your overall taxable income, which adds up to considerable savings.

But don’t stop there —  put the power of compounding on your side

When you save in a retirement plan, you’re putting the power of tax-deferred compounding to work for you. Your money can grow  faster because earnings that could have been taxed get reinvested and earn even more. In addition, if your budget permits additional savings, the power of compounding interest can yield considerable savings in after tax choices such as savings accounts.  Speak to a retirement counselor to learn more. 

Sandeep Kaur