According to the World Economic Forum, there are more centenarians in the U.S. than anywhere else in the world. Indeed, the combination of better healthcare, nutrition, and other factors mean more people are living to 100 than ever before. The UN also predicts that by 2025, over a quarter of the population in the U.S. and Europe will be over 65. On the flip side of the coin, the Centers for Disease Control and Prevention says COVID-19 caused the life expectancy of the average American to fall slightly.
Those mixed figures actually highlight one of the challenges of saving for retirement. Few of us know how long we will live for. That can lead to an understandable temptation to live in the now rather than put money aside for the future. Particularly when sky-high living costs are putting so much pressure on everybody’s bank accounts.
The trouble with this thinking is that you really could live to be 90 or 100. If you don’t have enough put aside — or are in debt when you retire — you may have to work a lot longer than you’d planned. You might also wind up leaning heavily on your children or have to move out of your home. Unfortunately, according to a study from AARP, only around 40% of people in their 30s and 40s feel prepared for retirement.
Start now to reduce stress in your old age
The earlier you start to save and invest for your old age, the less financial stress you’ll have in your autumn years. Time matters because it allows your assets to earn compound interest — basically interest on your interest.
To give you an example, if you invest $2,000 when you are 25 or 35, it will have longer to work for you than if you invest the same amount when you’re 45 or 55. It’s kind of like a snowball gathering momentum and size as it rolls down the slope (in a positive way).
