While it's easy to postpone saving for retirement, the benefits of starting early are profound.
By Gaven Pinkley
Associate Advisor, LPL Financial
As financial advisors, we advocate for early retirement planning due to the many benefits that it has on your financial future.
- Compounding Growth: By taking advantage of compound interest as early as possible, your investments can expand tremendously over time. This compounding impact speeds up the creation of wealth and offers a strong retirement fund, both the product of starting early.
- Long-Term Financial Stability: Setting aside money early can create a steady stream of income throughout retirement that can sustain your preferred standard of living and act as a buffer against unforeseen costs. Starting early helps you be financially confident and independent far into the back half of retirement.
- Strategic Asset Allocation: By starting early, it is possible to optimize investment returns, manage risk, and allocate assets strategically. Early portfolio diversification can help manage market volatility.
- Addressing Future Needs: Early retirement planning provides flexibility for evolving life circumstances, ensuring financial preparedness for future challenges and maintaining financial confidence throughout retirement.
While it's easy to postpone saving for retirement, the benefits of starting early are profound. Whether through plans like 401(k)s or individual retirement accounts (IRAs), the sooner you begin saving and investing, the greater your financial well-being in retirement. It's never too early to start planning for your future—your older self will thank you for it!
Category: Retirement
Asset allocation does not ensure a profit or protect against a loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
Investing involves risk, including the potential loss of principal.
