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Why you should save for retirement when you’re really young πŸ§“

Why you should save for retirement when you're really young

Why you should save for retirement when you’re really young –

Introduction πŸ‘‹

Who wants to work forever? Not me! πŸ™‹β€β™€οΈ

When you get older, people usually reduce the amount of time they work, or even stop altogether.

This is called retirement. πŸ§“

People often retire due to things like:

  • health changes as they get older,
  • getting fed up of working,
  • or maybe saving enough money to live on!

But you’re young! πŸ‘Ό

Why should you care about retirement? πŸ€·β€β™€οΈ

It’s ages away, isn’t it? πŸ‘€

Today we’re going to explain why it’s important to save for retirement as sooooon as you possibly can! – Especially if you’re really young! πŸ‘ΆπŸ’Έ

Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.

1. Retirement is really expensive!πŸ’Έ

Retirement is possibly the most EXPENSIVE thing you will ever need to save for. πŸ’°

It’s often more expensive than:

  • Buying a house,
  • Getting married,
  • Raising children,
  • Going to university,
  • Or getting a car!

And the problem is, everyone has to retire at some point – you don’t really get a choice!

Retirement is super expensive because:

You have to pay for your living costs for a very long time πŸ’ΈβŒš

Imagine this, if you retired at age 60, you might need to save money for 40 years’ worth of living costs!

If you wanted Β£25,000 to live on each year for your 40 years of retirement, you’d need to at least Β£1 million in your retirement fund!

That’s a lot of money! 😬

It would take a long time to save up £1 million!⌚

Your health might get worse πŸ€’

As you get older, your health could decline, and this could cost a lot of money.

In countries where there isn’t free healthcare, this can be particularly worrying due to big medical bills. πŸ€•

Whether it’s getting someone to care for you in a nursing home, or getting a stairlift installed in your home, health problems can be expensive.

It’s important to save for retirement early, so that you have as much time as possible to prepare for all of these costs!

2. Time is more important than how much money you have ⏳

Start now with a small amount! πŸ’°

“But I don’t have a lot of money to save for retirement!” – I hear you say 😬

That’s totally fine – it’s the fact that you start saving now that is the most important!

Even if you started with just Β£100 – it can make a huge difference in the long run.

Growing your money with investing 🌱

When you put money in retirement saving schemes like a “workplace pension”, they usually invest that money for you, to try and make it grow before you retire! πŸͺ΄

(Investing is where you buy something, expecting that it’s going to increase in value over time. For example, your workplace pension scheme might invest your money into buying small pieces of companies to earn you extra money before you retire!)

The sooner you start investing in your pension, the more time it has to grow. 🌱

This creates a snowball-like effect where even if you invest a little bit of money, it can grow a huuuge amount in the long run. β˜ƒοΈ

The sooner you invest, the longer the snowball has to grow!

The more money you invest, the faster and bigger the snowball can grow. 🌨️

3. The younger you start, the easier it is to get enough money πŸ‘Ά

When you start your pension at a young age, it is a lot easier for you to grow the money in your pension fund. πŸ“ˆ

This is because you will have more years for the money to grow in investments! 🌱

For example,

Starting your pension at 25 years old

Nutmeg estimates that you’d need to save Β£479 into your pension every month, to reach a Β£19,000 a year income when you retire. πŸ§“

Starting your pension at 35 years old

Nutmeg estimates that you’d need to save Β£716 each month to reach that SAME Β£19,000 a year income! 😱

Β£716 a month is a lot more money to put together than Β£479 a month!

4. Government payments help, but aren’t enough!πŸ›οΈ

In the UK you can get “state pension” from the government. πŸ’Έ

This is money that you can claim from the government at “pension age” (66-68 years old depending on when you were born). πŸ§“

You get this money after paying “national insurance tax” to the government when you work. πŸ’Ό

You need to pay towards “national insurance” for 35 years to get the full state pension money from the government. πŸ—οΈ

In 2021/22 people can get up to Β£179.60 per week as their state pension.

For a lot of people this isn’t enough money to comfortably live off when they retire, which is why they invest in pension schemes/workplace pensions.

5. You probably won’t regret having a great safety net πŸ₯…

Some people argue that saving into a pension could be pointless, because the world is very unpredictable.

– We don’t know what life will look like in 50 years! πŸ€·β€β™€οΈ

BUT

What we do know, is that in 50 years money will probably still be useful. πŸ’Έ

In 50 years’ time, would you ever find yourself thinking “Oh I wish I hadn’t saved all of that money to live off!”?

Probably not!

Growing your money through a pension could help to give you a great safety net for an uncertain future. πŸ₯…

6. It could give peace of mind for you and your loved ones πŸ’–

Money stress can be one of the worst feelings to ever experience. 😒

Worrying about how you’re going to pay for food, shelter, and family can be particularly painful.

Experiencing money issues/stress can create:

  • sleep problems,
  • low confidence,
  • low energy levels,
  • feelings of anger, shame, and fear,
  • increased risk of depression and anxiety.

Having pension savings for the future helps to reduce money stress, giving you peace of mind that you have a safety net for when you get older. πŸ₯…πŸ›€

Conclusion πŸ‘

So that’s it!

You should consider starting to save for retirement when you’re really young because:

  1. Retirement is really expensive!πŸ’Έ
  2. Time is more important than how much money you have ⏳
  3. The younger you start, the easier it is to get enough money πŸ‘Ά
  4. Government payments help, but aren’t enough! πŸ›οΈ
  5. You probably won’t regret having a great safety net πŸ₯…
  6. It could give peace of mind for you and your loved onesπŸ’–

If you know any friends or family members who might benefit from learning about why you should start saving for retirement when you’re really young, share this post with them!

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