3 ways young people can start saving for retirement
Published Fri, Sep 1, 2017 Updated Tue, Feb 16, 2021
A common misconception is that only “old people” should be worried about saving for retirement. In reality, retirement isn’t something that you should only start thinking about when you hit your late 30s or early 40s. Waiting that long could actually be too late to secure all the money that you’ll need when you finally grow old enough to retire from your profession. As an adult, you can never be too young to start thinking about ways to save money for those twilight years. There are a wide variety of easy things that you can start doing immediately that will more than pay off in the long run.
Putting money away
It doesn’t take much to start putting money away with each payday that you receive on a regular basis. You don’t even have to put away a significant amount. Remember, you won’t be of retirement age until you hit at least the age of 65. If you put away even £50 every payday and get paid twice a month, over the course of 40 years you would have saved almost £50,000 without really doing much of anything at all. Before you start putting money away, however, you should always start by finding out how much money you absolutely need from each check. Add up all of your monthly bills and utilities and debts, if applicable. You should also make sure that you give yourself a little bit of spending money. Subtract the amount that you’ll be putting away from each check from whatever amount of money is left.
Open a savings account
Opening a savings account that you don’t plan on withdrawing from can also be a great way to start saving money for retirement at an early age. Savings accounts are designed to have higher interest rates than even interest-receiving current accounts. Oftentimes, it is the best practice to combine two or more methods of saving. For example, if you’re planning on putting away money from each payday, put that money directly into your savings account. Not only will you be saving a substantial amount of your own money, but you’ll also receive interest on that amount on a regular basis for the entire period of time that it has a balance. Different banks have different terms and conditions, however, so make sure that you know exactly what minimum balance you need to keep in the account at all times. It might be a good idea to invest in an ISA as you’ll get a tax-free wrapper on your cash up to a certain limit.
Get life insurance
Signing up for life insurance is also a really great way to make sure that your partner is provided for during your retirement years. If something unfortunate should happen to you and you should pass away, the loved ones that you leave behind won’t be without some type of income thanks to payouts from the life insurance policies. The type of policy you need will vary depending on the specifics of your own situation, so make sure that you do some research before signing up for any policy to make sure that it will be of use before the time comes.