While retirement may seem a long way away when you're in your 20s, it's never too early to start planning. In fact, saving even a little in your 20s pays off in the long run, and there are easy ways to get started. Learn more about how making the right investments and getting a financial accounting plan in place will make it easy to build a nest egg for your retirement years below.

Why Should You Start Saving for Retirement Now?

1. Reduce Taxable Income

In most cases, a portion of every dollar you make goes to the government and other agencies. However, if you invest in a 401(K) retirement plan or traditional IRA, all contributions are tax-deferred. This means that throughout your life, you'll lower your taxable income while saving money you can begin withdrawing in retirement.

If your employer offers 401(K) matching, that should be even more incentive. Under this policy, they'll match every dollar you contribute to a certain percentage. This is essentially free money you'll be adding to your savings every paycheck.

2. Grow Your Investments

Your 20s and 30s are the best times to invest in stocks. While the stock market fluctuates, investments generally grow over time. The younger you are, the more aggressive you can be with your investments, because you'll have a longer time to recoup losses before retirement. By the time you do retire, you'll have built a solid money pool to draw from, and if you invest in companies that pay dividends, you'll continue to see profits. To get started, a financial accounting professional can suggest a brokerage account and even stocks based on your risk assessment.

3. Don’t Count on Social Security

Social Security provides payouts for retirees, but the system wasn't designed to cover all expenses fully. In most cases, it only covers about 40% of the average wage. When coupled with retirement savings, it's plenty to live on, but if you rely solely on Social Security, you may find yourself delaying retirement or working part-time in your senior years.

4. Take Your Time

The later you start planning, the harder it is to catch up to the amount of money you need to save to retire. Saving $100 each week in your 20s is much easier than saving $500 each week when you're 40. Many people also find it easier to save when they develop a habit in their younger years.

If you’re exploring financial accounting solutions in the La Crosse, WI, area, turn to Tostrud & Temp S C. They welcome business and individual customers and are backed by over 35 years of experience. Their CPAs can assist with retirement planning, tax services, bookkeeping, and more. Explore their full scope of services online, and call (608) 784-8060 to schedule a consultation.