How to save up for and survive retirement

Growing up is hard and not because you have to call and make your own doctor appointments or because you are now responsible for feeding yourself daily, but rather because there is a constant fear of living in perpetual debt. 

Graduate students living in debt has become the new normal, which is a sad reality in itself. However, most people assume the degree is worth it. Students are blinded with the hope that after graduation, their degree will earn them a spot in a steady job making a healthy salary with plenty of extra room to pay off the debt before you exit your 20s. Unfortunately, that is often not the case. Even worse, we are expected to have a surplus of savings on top of paying that debt down.

If you are able to pinch pennies and pay off that debt in 5 to 10 years, you have missed out on saving for a variety of other things. This can include saving for your family, car, house, travel and retirement is equally as important to many people as paying off debt.

As far fetched as saving for retirement sounds, it really is not. In order to retire at the 65 years old and live comfortably for the remainder of your life with about $40,000 per year, individuals would have to save roughly one million dollars.

For those who read that last line and started sweating, starting a savings account at 22 years old would require roughly 9 percent of an average annual income until the age of 65, factoring in inflation. Beginning at the age of 25 would require a slight increase to 12 percent of an average salary per year saved. Even though that growth does not seem like much, 3 percent of your income could have still gone towards other expenses. These figures were based off of

It is not hard to believe 20 year-olds are not concerned with saving for retirement. Most of us are focused on starting a career, not ending one. However, thinking about this when we are young gives an advantage. 

In a recent study, Hewitt Associates found that only 31 percent of people between the ages of 26 and 41 have money invested in 401(k) retirement fund sponsored by their employers. If you were to begin saving $2,000 a year at the age of 25, which is roughly $38 a week, you would have saved roughly $560,000 in 40 years, assuming earnings grew 8 percent annually. If you started doing the same thing at the age of 35 for just three decades, you would only have roughly $245,000 saved. This means that you would have saved only half of the money in 30 years that you could have saved in 40 years.

These numbers are obviously fickle. Inflation will change and our incomes will vary, but there are many resources online to help you create a budget. There are calculators you can use and input your income, your spouse’s income, adjust inflation rates and even add in the money you already have saved. It is never too early to start saving for retirement.

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