Early Retirement Planning for 20-somethings

Posted by June Arland   

When you are in your twenties, you can already start planning for retirement. Early retirement planning has its advantages, so, it is not a good idea to postpone it until it may be too late. The main reason why early retirement planning works is that if you start saving for your retirement in your twenties, you can put away quite small sums of money on a regular basis (for example, each month) and end up with much more money when you retire due to compound interest, than those who started saving a few years before retirement, even if they put away much more. Never touch the money you are saving for your retirement needs, unless it is absolutely necessary.

Another important thing to do is to pay off your debts as soon as you can, an, once you are out of debt, stay out of debt whenever possible. Sometimes this means that you should survive on a tight budget during some period of time. For example, it is not the wisest decision to buy a house if have not paid off your student loans yet. Getting trapped in debts can affect your financial situation for many years, which is not what you want. Learn to save for things rather than use your credit cards excessively.

Many young people wonder where they can get additional incomes from. First of all, make your money work for you. A wise investment is what can make your assets grow dramatically. Also, it is desirable to find various sources of income other than your job. This can be contract works, a small business on the side, renting out your property, etc. Having several sources of income not only increases your cash flaw, but also puts you on the safe side: you may temporarily lose one of your income sources, but this wouldn't mean staying without any money at all.

Learn more about finance. The more you know, the easier it is for you to make the right decisions. There are many books, articles and financial websites that provide all kinds of information on financial topics, but sometimes a conversation with a financial advisor is also needed. More than a third of companies now offer their employees access to advisers who can help choose investments that will be most appropriate, explain what holdings are in a particular fund and why they'd recommend one investment over another.