Saving for your retirement: time is key

User Written by Magnus Jacobsson on April 17, 2019.

Saving for your retirement: time is key

Whether you are retiring in the next few years or still have decades of your career stretching out in front of you, you should be asking yourself the question: am I on track for a financially comfortable retirement?

From Singapore to South Africa, surveys around the globe are revealing that increasing numbers of people are not adequately preparing for retirement. The United States is reportedly heading for crisis, with one in five Americans have absolutely no savings to draw upon for retirement - or even a rainy day.

Our retirement funds are being increasing squeezed for a number of reasons. Firstly, we are all living longer so our savings are having to support us for an increasing number of years, secondly many retirees are lending financial support to elderly parents and/or children and thirdly, many people are coming to the end of their working lives with significant debts still left to pay off.

Some people fail to save for their retirement under the ill-founded belief that the state will look after them when they stop working. For many middle-class families facing stagnant wages pensions take a back seat as the cost of basics such as food and utilities rise and paying off debt such as mortgages and student loans take priority. Others are supporting two families as divorce statistics rise. Many simply lack the basic financial knowledge necessary to make a sound financial plan for the future.

And yet putting off saving for retirement is extremely damaging to your future pension pot. As with all saving, time is your greatest ally, allowing compound interest to work its magic. This is why it is absolutely key to start putting aside a percentage of your income as early as possible. Even if contributions are small to start with, you can build these up over time, safe in the knowledge that the amounts you are saving are accruing interest.

To show just how much difference it can make to start saving early on, have a look at the following example.

Let’s assume that you want to retire at 65 with a relatively modest income of $40,000 per annum. Even that amount would require a nest egg of $1 million. How do you reach that?

If you start your retirement fund at the age of 25, savings of $400 a month will get you there.

If you wait until 35, you will need to save more than twice that, $825 a month could do it.

At 45, you will need to put aside a scary $1900 per month.

At 55, monthly savings of $5,600 will be required.

The point I wish to get across is this: you can wait to start saving for your retirement but you will pay for it later on. The longer you wait, the harder it will be to reach your target income. Start saving now to be able to spend your golden years in comfort, not crisis.

Time waits for no one, so take action today – drop me a line at to get a head start on your retirement planning.

Magnus Jacobsson

Magnus Jacobsson

Posted on April 17, 2019 in Retirement Planning.