The Importance of Saving for Retirement Early
Wednesday, September 30th, 2020
It's no secret that saving is a key element in preparing for retirement. Yet a recent survey found that 66% of young adults are not meeting their savings goals when it comes to retirement saving. Often, when goals feel too far in the future, there is less motivation to actively save. That's why it's crucial to start saving for retirement as early as possible. Zoe Financial is the leader in connecting those looking to save for retirement with top financial advisors who can help them create a custom retirement saving plan. Saving for retirement early allows for more financial freedom, reduced income taxes, and higher likelihood of investment growth.
Find Financial Freedom
Most people retire in their 60s, meaning they likely have 20 to 30 more years with no working income. During retirement, most people expect to live off of their Social Security. Unfortunately, many have reported that their social security isn't enough to maintain their lifestyle. Too often this means having to downsize their home, miss out on fun outings, become very cautious of spending habits, and constantly worrying about healthcare expenses and financial emergencies. This is why saving for retirement early is so important, as no one wants to feel financially unstable, especially after they retire.
Reduce Income Taxes
When money is withheld from an individual's paycheck and placed in a 401(k) or 403(b) account, it isn't taxed until it's withdrawn. The advantage of this is that most people are in lower tax brackets when they retire, meaning the amount of taxes that they have to pay are reduced. Other accounts, such as Roth IRAs, also have tax benefits. Although the deposits are made with taxed dollars, they can grow tax-free once it's inside the account.
Zoe Financial knows how important it is to choose the right retirement account. Since there are so many different options, Zoe's Network of fiduciary financial advisors always work with their clients to find the right account with the best tax benefits.
When a person makes an investment, they're putting their money to work. All they have to do is invest some money and allow the compounded interest to grow their wealth. Let's use a stock index fund as an example. If someone invests $500 a month into an investment account, it equates to an annual investment of $6,000. Based on a 10% return for 30 years, his account would grow to over $1 million. This is significantly more than he would have if he didn't make those monthly investments or take advantage of compounding interest.
Investing may seem intimidating as there are so many different routes that a person can take. Andres Garcia-Amaya, CEO & Founder of Zoe Financial, acknowledges that, "Investing isn't one-size-fits-all! Your financial goals, unique financial situation, time frame, risk tolerance, and comfort levels are all part of your investment strategy." That's why Zoe's financial advisors help their clients choose the right way to invest, depending on their situation. In doing so, their clients have an extra income when it comes time to retire.
Sandwich Generation Planning
The sandwich generation is the middle-aged generation who financially supports both their children and aging parents. This is a huge responsibility that most people are not financially prepared to handle. Many retirees have even been part of this generation earlier in life when their own parents reached the age of retirement. For those that have, they know how difficult it is to support two generations, as well as themselves. One of the most important reasons that a person should save for retirement early is to prevent putting a financial strain on their children.
Saving Early for Retirement with Zoe Financial
As Zoe Financial states, "Saving for retirement is going to be one of the biggest savings goals you will have in your lifetime." They know how important these savings are, which is why they recommend including it in one's financial plan. Part of a financial plan will include picking out the right retirement account. Additionally, the financial plan created alongside your fiduciary advisor should include different strategies so that the individual can be more financially stable in the future.
Along with investing, one of the other approaches includes making a great tax strategy. This strategy maximizes all of the elements of a financial plan. By looking at the plan from a tax perspective, financial advisors can save their clients thousands of dollars every year. This extra money allows their clients to reach their short-term and long-term goals, which includes being financially secure when they retire.
The sooner a person starts saving for retirement, the better prepared they'll be for the future. By doing so, they can live the life they want to live, even after retirement. For anyone who needs to build their financial plan, Zoe Financial will match them with one of their experienced financial advisors.