Five good reasons to start saving for retirement early

I’ve decided to give you yet another reminder about how important it is to start saving for retirement early. Why? Because it pays off in the long run! If you’re a new reader—or if you haven’t yet got the message—read on to learn more.

For the skeptics out there, here are 5 good reasons to start saving early.

1. It’s easier.
   If you start saving early, you don’t have to put as much aside each month. It’s the magic of compounding in action. For example, let’s say you start contributing 100 $ a month to an RRSP at age 25 and earn 3% on your contributions. At age 60, you’ll have saved up 3 times more than if you had started contributing at age 45. To save the same amount from age 45, you’ll need to stash away 325 $ a month.
    
2. You can use your retirement savings for leverage.
   Purists won’t like me telling you this. But I’ll tell you anyway. The money you save for retirement belongs to you, and you can use it…intelligently.
   
   If you contributed to an RRSP, for example, you can use the amounts in it to buy your first home under the Home Buyers’ Plan (HBP) or go back to school under the Lifelong Learning Plan (LLP). There’s nothing wrong with using your savings under those plans, provided you repay the amounts you use. And of course, the earlier you start saving, the more money you’ll have at your disposal.
    
3. It can make phased retirement a reality.
   When you start saving young, you increase your retirement options, including phased retirement. Your savings can provide a nice financial cushion and take a big load off your mind.
    
4. People who save have less debt.
   This might seem obvious, but think about it. Someone who starts saving early is more likely to watch their budget and finances. Without being a penny-pincher, you soon understand the value of money and think twice before making any unnecessary purchases.
    
5. It’s rewarding to save!
   Who doesn’t like to see their RRSP account increase year after year? Even if you haven’t socked away a fortune, it’s still money you worked hard to save. And while your electronic gadgets and other doodads depreciate and are nearly obsolete once you leave the store, your savings will continue to increase in value and eventually give you the best present ever: a comfortable retirement.

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