Is it feasible to begin planning for retirement in your twenties? Retirement planning is a topic that is frequently associated with older persons in their thirties or forties. The quick answer is that it is not only feasible but also strongly advised. Your 20s are a crucial decade for planning your financial future, and the choices you make now could significantly affect how you retire later on.

Let us know why retirement planning in your 20s is not only possible but also essential for securing a prosperous future.

The Power of Early Savings

The importance of early savings is one of the most persuasive arguments for beginning retirement planning in your 20s. The truth is that time is your best ally when it comes to generating wealth. Many young folks think they have a long time before they need to worry about retirement. The sooner you begin saving, the longer your money has to work its wonders through compound interest.

Imagine two friends, Rohan and Sam. Rohan starts saving for retirement at age 25, contributing $200 per month to their retirement account. Sam, on the other hand, decides to start at age 35, also contributing $200 monthly. Assuming an average annual return of 7%, by the time they both reach age 65, Rohan will have nearly twice as much saved as Sam. This illustrates the significant advantage of starting early.

Also Read: Gold Buying: 3 best options to invest in gold & how to do it

Setting Achievable Goals

The best time to set clear retirement goals is while you’re in your 20s. You can lay out a plan for accomplishing your retirement lifestyle goals by imagining it. Do you want to spend your retirement years relaxing at home, taking up a second job, or travelling the world? Setting goals early on offers you something to work towards and inspires you to save money and make smart investments.

Establishing Healthy Financial Habits

Planning for retirement in your 20s involves more than just accumulating money; it also entails creating sound spending and saving habits that will serve you well in the future. You can start along the road to financial success by learning to prioritise savings, live within your means, and create a budget. These routines will aid you in managing other financial milestones like home ownership and debt repayment in addition to retirement savings.

Embracing Risk for Greater Rewards

When it comes to investing, you have the benefit of time in your twenties. In your portfolio, you can afford to take on greater risk, which could result in larger returns. Stocks are a common example of a riskier investment that tends to be more volatile but historically has produced higher long-term results. You can withstand market changes and take advantage of the potential for higher wealth accumulation by getting started early.

Preparing for the Unexpected

Unexpected obstacles might come along at any age since life is unpredictable. You can have a safety net in terms of money if you start saving for retirement when you’re in your 20s. Having money as a backup can help you avoid taking on high-interest debt and safeguard your long-term retirement resources, regardless of whether you encounter medical expenses, a job loss, or other unforeseen events.

Conclusion

To sum up, it is wise and prudent to consider retirement planning in your 20s even if it is technically feasible to do so. A bright future filled with financial security, independence, and fulfillment may be created during your 20s. The above points are strong arguments for why planning for retirement in this decade is not just feasible but also crucial for determining your future.

It’s important to keep in mind that retirement planning in your 20s is about more than just ensuring your financial future—it’s about taking charge of your future. Your twenties are the starting point for a life full of chances, financial stability, and the flexibility to follow your hobbies. Even though retirement may seem far off, the choices you make now will affect the kind of living you have in the future. Make the most of the opportunity to influence your future by sowing the seeds of financial success in your 20s. Your future self will appreciate the tranquillity, safety, and wealth you’ve grown along the path.

‘Financial freedom isn’t an age; it’s a mindset. Embrace it in your 20s, and your retirement will reflect that choice.’

(By Koushik Ketharam, Director, Intelli360. Views are personal)