Every one of us is going to retire someday – that is a fact. If you have just begun your career, then you might be excited to think about what lies ahead. However, if you are a few years into your working life, the thought of retirement may seem a little scary. With so many things to look after in our lives, saving for retirement seems like it’s often overshadowed by other financial decisions we have to make, such as how much we would pay bills or take care of our families. In this article, I will go over some ideas on how you can start planning for your retirement now, even if you are young and far from retirement age.

Why is it important to start retirement planning early? 

There are three reasons to start retirement planning early:

  • You will save more: It doesn’t matter if you save N10,000 or N100,000 or N1,000,000 when you’re young. If you start saving when you are young, you will accumulate more wealth. Starting early means you start compounding sooner.
  • Your risk will be lower: Life is full of risks, but college and graduate school are kind of risk-free. If you get five job offers, and you choose one, the other four companies will be forced to let you go. But retirement, especially retirement at 62, is not risk-free. There are big health risks, to longevity, and your portfolio. So it makes sense to start preparing for these risks early.
  • The third reason is practical: You’re more likely to stick to a plan if you start it when you’re young. If you start when you’re 40, and you still aren’t saving enough, you’re more likely to quit than if you start when you’re 30, and you’re still saving.

How to start planning for Retirement

Know what you need in retirement

Retirement planning requires asking and answering a series of questions. First, what do I want to do when I retire? Second, how much will it cost me to do those things? Third, how long can I pay for those things? And fourth, what do I expect my lifestyle to be? These questions are easier to answer when you are young and healthy. But the answers change as you grow older. They change even more if you retire early when you usually have fewer financial resources. The time to start saving for retirement is right now. And figuring out how much money you will need can be surprisingly difficult. It’s important to outline these needs so that you can determine what you’re working towards.

Be realistic about what you’ll need during retirement

People assume that their savings will last indefinitely, that inflation will never hit them, that they will never run out of money. In fact, most bank and brokerage accounts are destroyed by inflation, and most retirees have plans that no longer work. Most retirees have unrealistic notions of how much money they need to retire comfortably, but the real problem is their unrealistic notion of how much money they need to stay retired. A house, a car, and year-round travel are luxuries. Almost everyone who retires is living below their means. Be realistic about what you’ll need and work towards that, whether you would like to live lavishly or low-key.

Start saving

There are good reasons you should save. Retirement is a time when expenses are likely to go up a lot. Medical costs, for example, are much higher in old age than they are when you are young. So even if you save little, if you save early, you will have more to spend. Besides, retirement is a time when you will usually spend more of your time on things that don’t involve working. If, for example, you write a book or start a business, the money you earn is probably your main source of income. So it makes sense to put the money you earn from these activities into savings. There are some obvious ways to do it. Save a percent, for example, of your income, or save a certain amount every year. But neither of these is what economists call automatic. You have to make the choice each year. And if you have an unpleasant year, it’s hard to make up for it. Automating savings is a lot easier. Put money into a retirement account, and the money grows automatically.

Contribute enough to your employer’s 401k

A 401k is a tax-deferred retirement plan. You contribute to it and your employer contributes to it, and the employer match is matched by you. The contributions you make and your employer’s contributions grow tax-deferred, meaning that you do not pay tax on them until you withdraw the money. The idea behind 401ks is that you put money aside when you don’t really need the money. By saving for your retirement, you put off having to think about where your money will come from. You leave it to someone else. But that’s only part of the idea behind 401ks. The other important part is that your employer puts money aside for your retirement. You both benefit from society’s investment in your retirement.


If you want to retire wealthy, the earlier you start saving, the better. Start early and save consistently. You’ll be amazed at how much you can accumulate over time.

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