There’s always a reason not to save for retirement. 
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Early in your career, you’re most likely paying off student loans, saving for a down payment on a home, or maybe paying off wedding debt, all while earning an entry level salary. As you move into your 30’s, you might be dealing with the cost of raising children or taking out more loans to return to graduate school. By your 40’s and 50’s, the home you bought all those years ago probably needs updates or repairs and you may want to help your kids pay for college.

It’s not surprising that there are Americans a decade or so away from retirement age don’t have adequate savings. In fact, some people may intentionally put off saving for retirement thinking that they can always make up for it later in life. 

I feel that this is a poor strategy and here’s the main reason why: You might not be able to work as long as you’d hoped. 

Catch-up contributions were designed to help workers make up for lost time. This is a great opportunity – if you can take advantage of it. But what happens when you were planning to catch up but end up having to retire early?

The truth is that a lot of people don’t work for as long as they’d planned for a variety of reasons. 
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Sometimes, health issues prevent people from working to retirement age. Or they lose their jobs because companies downsize or go out of business. There are a lot of things that can happen. If you’re planning to catch up in your late 50’s or early 60’s, you should know that that isn’t always a possibility. 

There’s another big reason why it doesn’t pay to wait. You don’t have as much time for your money to grow. Compounding interest over a long period of time grows even the most modest savings into large sums. As an example, if the average rate of return is 7% and you started saving $300 a month at age 27, by the time you’re 67, you’ll have about $720,000. If you start saving this amount at age 42, you’ll end up with about $225,000. Start at age 52 and you’ll only have about $90,000. 

As you can see, saving a few hundred dollars every month at the beginning of your career can help to build a pretty decent retirement fund. Even if you can’t spare that much, start by saving what you can and ramp it up a little bit every year. In the long run, it’s worth it, even if monthly expenses make it a little tight. 

Playing catch-up sounds great in theory but it shouldn’t be your main savings plan. Anything can happen. If you can contribute more during the catch-up period, that’s a bonus. The best approach is to consistently save what you can throughout your working life. You’ll be glad you did.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice. The example provided is a hypothetical example for illustration purposes only. Actual investor results will vary. Investing involves risk and investors may incur a profit or a loss. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.