Money

Don’t Delay Your Retirement Savings Another Minute

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If you’re new to the workforce, retirement is far from your mind. You’re thinking about buying a car, stocking a wardrobe, or furnishing an apartment. When you’re young, spending is much easier than saving.

[Related: Working With the Government: 4 Tips for Business Owners]

According to a 2015 study from the Employee Benefit Research Institute, 28 percent of workers age 25-34 had savings of less than $1,000, excluding their primary residence and company pension.

Retirement is expensive. If you let years tick away before taking action, you’re reducing your retirement income a bit more each year.

“The sooner you can start, the better, even if you have to start at a small percentage,” says retirement expert Kerry Hannon, a member of TIAA’s expert panel on Woman2Woman. “If it feels like it’s too much, you can automatically increase it 1 percent; pump it up until you get to the maximum amount.”

If you live a long life, an unplanned retirement can mean years of anxiety. Why?

*You can’t depend on a corporate pension. They’re being dumped at warp speed.

*Rising health-care costs will leech away retirement income.

*It’s doubtful that Social Security will be enough keep your head above water.

“A substantial gap has opened up between the resources we need for a secure retirement and income we can currently expect from our nation’s retirement programs,” say Charles D. Ellis, Alicia H. Munnell. and Andrew D. Eschtruth in Falling Short: The Coming Retirement Crisis and What to Do About It.

In the past, retirees could live comfortably on pensions and monthly Social Security checks. Not anymore. You’re on your own when it comes to saving enough to stay afloat in retirement. It’s up to you to find the funds. Your options:

*401(k) savings plan sponsored by your employer;

*Individual retirement account (IRA), which lets you put pretax income in investments that can grow tax-deferred;

*Roth IRA, which differs from a traditional IRA in that contributions are not tax deductible and qualified withdrawals are tax free.

“Early participation in your employer-sponsored retirement savings plan is critical,” says Dwight A. Clark, senior retirement financial planner at TIAA. “If you think you cannot afford to contribute to your employer plan, remember that increasing your retirement plan contributions may help lower your overall taxable income.”

It behooves you to start saving now. TIAA’s Clark illustrates why. Two investors save for retirement. The first investor, Cathy, starts saving at age 25 and saves $5,000 per year. The second investor, Steve, doesn’t start saving until age 40, but saves $10,000 per year. Overall, Steve contributes $50,000 more than Cathy but started 15 years later. At age 65, Cathy has $232,418 more than Steve.

Moral of the story: Time is on your side, so start today.