Retirement 'Must Knows'

No doubt human beings advantage over animals from their ability to plan ahead. But isn't this also true that most of us have difficulty planning for even six months ahead? If planning for six months is difficult, then how can we plan something for the distant future - like retirement?

It is very important that you start saving for your retirement or you will have to repent later in life. Below, is a list of retirement truths that will prepare you for the future.

1. It's the modern age

Never compare your retirement with your parent's retirement. That time and the present time or the so called modern age, are poles apart. Almost 30 years back, Individual retirement accounts (IRAs) were just being created and most of the things came cheap. Social Security, pension cheques, and savings were enough for safe proofing retirement. On an average, people did not even live after the age of 70 and therefore, retirement was not too long.

But in the present age, the case is not the same. You will live longer. Not only this, you will have an active lifestyle too. Your parents may have survived on 70% of their pre-retirement income. But this is not enough for you.

2. Don't rely on the three legged stool

Social Security, pension cheques, and savings were the three legged stool on which people survived earlier. If you put your retirement on this three legged stool, there's a good chance it's going to collapse.

You do not have any control on social security and pension cheques but you have sufficient control over your savings. So, the other two legs may have cracks, this is the one which you can make as strong as you want to. What you save will have the biggest impact on your future life.

3. Start young

It is always better that you start saving early. A person, who starts saving at the age of 25 will obviously have more savings from the person who starts saving at the age of 35.

There are three things under your control that will have an impact on your retirement. 1) How much you invest, 2) The rate of return you earn on your investments and 3) the number of years those investments have to grow. If you start early, the more money you will have and better opportunities too.

These three truths about retirement should help clear your mind. Follow these three tips before 30 and life will be great after 60.

It is always better that you start saving early. A person, who starts saving at the age of 25 will obviously have more savings from the person who starts saving at the age of 35.