Why Investing in a Retirement Plan is Essential for Your Financial Security

Investing in a Retirement Plan for a Secure Future

If you aren't regularly saving in a retirement plan, it may be difficult to amass enough investments to supplement your Social Security benefits. If you want to retire, you need to work toward that goal throughout your entire career. While you may feel like you have lots of pressing financial obligations that should take priority, the reality is that you can't afford to wait to start saving in a retirement plan.

You can't live on Social Security alone

As disappointing as it may be, you can't count on Social Security to support you as a senior. It will help, of course, but replace only around 40% of what you were making on the job. You'll need around 80% of pre-retirement income, at a minimum, to avoid a drastic and unpleasant decline in your quality of life.

• Your employer probably doesn't provide a pension and, at some point, you'll get too old to keep working.
• Savings is the only option left.

The longer you wait, the more you have to save

It may be tempting to assume that you can just catch up by saving more later when you're more financially stable -- but that's not as easy as it seems. The longer you wait to begin investing, the more you'll have to invest every single month to end up with the nest egg you need. That's because you won't have the power of compound growth working for you.

1. When you invest, the money you earn from those investments will be reinvested and help your wealth grow without you needing to contribute every dollar to your account yourself.
2. Compound growth makes it possible to save a reasonable amount for retirement and still end up with the nest egg you need.

Start investing for retirement right now

Tax-advantaged plans like a 401(k) or IRA can make it easier to save enough, so open one if you haven't already and start contributing to it now. You don't have much choice if you want to retire someday in the future.