Why should I save for retirement is one of the questions that I have most frequently encountered. And I have also observed that no matter the answer, it is quite common that people postpone their decision to voluntarily save for their retirement until they see it close. I asking in different media and forums, I found that the average age at which people – at least Latinas – begin to take seriously the issue of his retirement fund is around 40 years … and then has already spent half of their productive life, so that the financial effort for building a reasonable background increases significantly. But what really is important to think about it if you have 20 years? Not perhaps is the responsibility of the government and enterprises providing a pension to employees being created for it the Retirement Funds. Having so many bills to pay, why should my money stretch further? Having the life ahead to start a business or carry out projects, why would divert resources savings in old age when I could live from my business or the performance of my investments? The life is today! So why freeze money for many years for a tomorrow that may not get to see? Annuities calculator is certainly the way to go in this case!
Why start young?
The financial effort increases exponentially as your birthday. I explain. Suppose a person of 20, who plans to retire at 60, start saving $ 200 a month at a constant rate of interest of 10% annually. At the end of his life works he would have a fund of $ 1,062,222.13a
But what if saving start at an older age? Consider the following table
Retirement fund reached by age start saving
As we can see the decrease in the fund decreases very significantly as time passes. Because of this, to achieve the same background beginning only 10 years later (at age 30), you would need to save $ 540 a month with the same 10% annually, or get an annual return of 15.10% to achieve the same background saving the $ 200 to month. That is, you would almost have to triple your savings or double the rate of return. And neither it is easy.
You are the most interested in the level and quality of life in old age has.
One of the great achievements of union early last century was established that, after a long working life, workers have the right to receive a pension that would allow them to live their old age with dignity. Without intending to question the social justice behind the pension system, the reality is that the system was defined when life expectancy in industrialized countries was 65 years, the world population was a quarter of the current, and the majority of the population were young. Today, thanks to science and medicine, life expectancy exceeds 75 years, and an increasing segment of the population is reaching retirement age becoming in many countries more than the young population, so the system falters, increasing the retirement age and creating programs increasingly mandatory retirement savings in many countries (retirement Fund).