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Retirement Advise for Young Adults to Retire Sooner

Retirement Advise for Young Adults to Retire Sooner

One of the biggest advantages most young people always have is their age and this can be used for their benefit when planning for retirement but only if they follow good retirement advise to be able to retire sooner. With this age bracket young people can take advantage of compound interest by starting a regular savings plan as this is a very powerful investment tool that can make a viable retirement plan and start a budget to watch what they spend each month. 

Take for example by setting aside only a sum of $200 per month from the age of 30 while compounding it at 4% interest rate, a young adult can grow this savings into over $200,000 by the time he or she is 67 years-old. If the saving amount is doubled, such a person could be well worth over $400,000 dollars in savings accrued. Furthermore, your savings when combined with a retirement plan offered by employers,  becomes absolutely easy to save towards retirement given the pre-tax dollars that the individual will not have to think about. For the best tax treatment this savings can be contributed into your superannuation or 401K plan and set up to assign these funds automatically with one's employer. 

As a young adult, one can also consider cutting down the cost of some big expenditures and this allow the opportunity to start saving big money. Ultimately, one of the best ways of saving money is to divert some cost of expenses into investments. As a form of principle do not on any occasion buy what you do not need as a lot of youth may get easily distracted with buying the latest electronic gadget and waste money on things they want but do not necessarily need. Other good advise to cut down on expenses is to shop at discount grocery stores, always buy good clothing items etc at discount prices,  when needing to go on vacation opt in for only cheap vacations that are within driving distance (otherwise strike them off) and have a budget for all expenditure that you always stick to. It could be much easier to save money than it is to make more. 

Also, do keep in mind that with going through this retirement plan, on the surface one might not look as wealthy as other peers and friends but the hidden fact is that one is probably much more wealthier financially than they are and it will take until the retirement period for this fact to be conspicuous. In the meantime perception is everything while you may be savings for your children's education and your retirement they could be spending their excess funds on their homes and cars. 

A lot of young persons take pride in showing off their financial stuff or assets, they buy the nicest houses they can get and spend their hard-earned money on similar things. Unfortunately for them, they do not realize immediately that the nice house also comes with a large mortgage payments. A good rule of thumb to follow as advised by certified financial planner  and financial advisers is to ensure that any housing cost should not be over 30% of one's household income. Take for example, if a couple make $70,000 (i.e. each at $35,000/year) then averagely, they could pay $1,400 per month in housing costs. 

Following all the above retirement advises, the savings that comes from them can in turn be diverted into your retirement savings schemes.

 

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Thursday, 24 January 2019

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