You know the drill.
If you want to save for retirement it’s best to start early, even if you can only contribute a small amount of money — that amount will add up over time (it's the power of compound interest). You know this is true because you’re smart. Yet there’s something holding you back from taking that first step toward saving for retirement.
I know how you feel. I’ve been there, too.
There are a certain set of excuses that have been holding me back from saving for retirement. In all reality these excuses have no merit to them.
If you’ve been struggling to get started saving for retirement here are the six excuses you need to overcome.
1. You Don’t Make Enough Money
I always thought that I didn’t make enough money to start saving for retirement. The truth is that it really doesn’t matter how much money you make. Contributing something, even a tiny amount, is better than contributing nothing at all.
To overcome this excuse pick a small amount and set it aside each week for your retirement account. Start by stashing $20 each week and work your way up. When you get a raise or come upon a small windfall add that money to your retirement savings. You’ll be surprised how fast this money will add up.
2. You Don’t Have Enough Money to Open an Account
If you don’t have an employer-based retirement account then you’re like me and need to open up one yourself. This usually means having a minimum initial investment. Luckily the initial investment probably isn’t as much as you think. In fact, many brokerage accounts let you open an account for nothing, or even just $100. Our favorites are Scottrade and TD Ameritrade.
If you still don’t have the initial investment amount, don’t worry. All you need to do is create a separate savings account and build it up until you hit that initial investment amount. Once that’s complete just deposit the money into your new retirement account.
3. You Don’t Know Where to Start
There are tons of options when it comes to saving for retirement. Which do you pick?
If you have an employer-based retirement account with a match that’s probably the best place to start. If not, there are tons of online brokerages you can open up an account with.
You could open up a Roth IRA with a low initial investment, work on maxing that out, and then research other options from there. The most important thing is that you just get started.
Still confused (or want someone to hold your hand)? That's what our Investing 101 course is all about!
4. You Think Investing is Too Complicated
If you think investing is too complicated I can totally relate. I’ve been going back and forth on what I should invest in and what I shouldn’t invest in. It’s definitely important to research your options but the truth is we tend to overcomplicate things that we haven’t taken the time to learn about.
Investing doesn’t have to be complicated. Do some research and find an investment that you are comfortable with. Then open up an account, schedule a monthly contribution, and forget about it. The complication can be completely removed from your investing strategy.
5. You Have Plenty of Time
You’re young and retirement is far off, so why should you think about investing now? Sometimes it can be hard to think so far into the future. Right now you have different financial goals that you’re working on and would rather spend your money elsewhere.
The truth is retirement is going to come faster than you think. I, for one, am always amazed at how fast time flies by. Saving for retirement isn’t an option, it’s a necessity. The earlier you start saving the more money you’ll have in your retirement years. Also, the earlier you start saving for retirement the less you’ll have to save.
6. You’re Scared
I’m sure we all know someone who lost a boatload of money in the stock market crash. It’s a scary thought: invest your hard-earned money and then lose it in the blink of an eye. That thought alone is enough to paralyze you.
The truth is that a lot of the people who lost all their money in the stock market weren’t well-diversified. And, remember, investing doesn’t just mean putting money into the stock market. Your investment options are endless. A well-diversified investing plan will help you protect and increase your hard-earned dollars.
Just Do It
Are you ready to start investing?
Start slow. Put some money aside each week until you have enough to open up a retirement account. Research investments that make you feel comfortable and learn as you go. Investing for retirement shouldn’t be scary, it should be freeing.
By saving just a little bit today you can build up the momentum (and cash) you need to have a comfy retirement.
If you haven’t started saving for retirement yet, what’s standing in your way?