First job, first paycheque - you're likely to think about how to spend the money, rather than save it. When you do put some money aside, it's probably towards a holiday, a new car or a boat. At some point, you might think about saving up to buy your own home. Sometime later, you might actually do so. Further down the list, if it appears there at all, is saving for a comfortable retirement. That's not usually a priority for most starting a career, but it's something everyone should think about.
Even though it seems light years away from now, there'll be a day when you stop working and will need to live on your savings and pension. Your income and the size of your savings pot at that stage will make a big difference to your quality of life. The sooner you start to invest in your own retirement, the easier it gets and the more you can put aside over the long term.
Saving for retirement should ideally start from your first day in your first job. Treating it as a recurring expense means that it won't affect the amount of disposable income you get used to, so you can still do the things you enjoy today. There are also good reasons to start saving something immediately. Saving a little at a time but often and for longer can make a huge difference later in life. The sooner you start, the more you will have saved up when you finally retire - a day that will come sooner than you think.
A recent study - by a Bachelor of Commerce student at the University of Malta of 1002 respondents aged 18 to 39 - shows that 80% of people with an income save some money most months. Almost 60% put aside at least €100 each month. MSV Life recommends starting saving as soon as possible and where possible see if your employer will help. It is possible to set up a workplace savings scheme where a percentage of your salary is paid directly into your retirement scheme. Employers need not contribute to the scheme unless they wish to do so. This is believed to be a good incentive to retain staff by contributing to their long term financial wellbeing.
To plan your savings for retirement, you can try MSV Life's free online calculator which provides an accurate calculation of how much state pension you will receive and when you will receive it, based on the current rules. It takes into consideration your salary, the number of years worked to date and your age. The tool also enables you to plan what income you would like to receive in retirement and then calculates how much you will need to save today to reach your target. If you have existing savings set aside for retirement, then the calculator can take these into consideration and will show you the difference they will make. You can also play around with the amounts you save in order to see how this will affect your income in retirement.
The online calculator is available at www.msvlife.com/myfuture. For more information or personalized planning call us on freephone 80072220 or send an e-mail at [email protected].