Retirement planning is important because it can help you avoid running out of money in retirement. Your plan can help you calculate the rate of return you need on your investments, how much risk you should take, and how much income you can safely withdraw from your portfolio.
Although you cannot guarantee a set rate of return, compounding interest is a great benefit of early investing in retirement. Put simply, the earlier you start saving for retirement, the more money you will end up with—to an exponential degree—and the less capital you'll need to put into your savings.
Here are four good reasons to save for retirement:
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Employees who have been with the company for decades are often making significantly more than their counterparts who just joined the organization. ... By encouraging those older workers to accept an early retirement package, companies can pave the way for younger, and less expensive, workers to take their place.
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The amount you are entitled to is modified by other factors, most crucially the age at which you claim benefits. For reference, the estimated average Social Security retirement benefit in 2021 is $1,543 a month.
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A general rule of thumb is to have one times your income saved by age 30, twice your income by 35, three times by 40, and so on. Aim to save 15% of your salary for retirement — or start with a percentage that's manageable for your budget and increase by 1% each year until you reach 15%
Higher levels of debt make it harder for people to save for retirement, said Catherine Collinson, president of Transamerica Center for Retirement Studies. In fact, a Transamerica survey found that a higher percentage of workers cite paying off debt as more of a priority than saving for retirement.
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