Investing In Retirement - Essay Example

Investing In RetirementIt is essential to save consistently and develop viable plans of saving in achieving retirement goals. This can be done through considering schemes that provide tax incentives on savings. It is for this reason that my wife (a chemical engineer) and I (a geologist) are planning to start investing and saving for the future.The sooner we start setting money aside for retirement, the better because this is what makes investment worthwhile in the end. Starting early enough is imperative because of the aspects of compounding interest that tends to accumulate the amount invested.

Compounding interests provides valuable returns at the end. For instance, if we start putting aside $1000 per month starting at the age of 30 it will end up being $453600 for each of us at the age of 65. This is based on the assumption that the rate of return is at 8 percent per annum. If we wait for ten years, we would only save $129000 each. Considering that a small difference in contribution amounts $129600, which is $1000 each month for ten years. However, the actual difference in total saving is enormous and amounts to $259200.

Investing wisely is encouraged for it helps in ensuring that the maximum returns are yielded on the amount spent. Thus, lessons learnt from retirement savings entails starting early and setting aside at least 10 to 15 percent of the annual salary on retirement.For a worthwhile investments return, it is good to start investing earliest possible. Additionally, it is worth setting aside an average of 10-15 percent of the gross earning on a monthly basis. From this I have learnt that to save for the future is good because the future is uncertain.

The money we save now may be used to cater for our need in future when we have retired and have no other source of income.