Page 57 - Book10E

less you need to save each month. The less you need to save, the easier it is to stick with the plan. If you are in your twenties or even thirties, don’t fool yourself into thinking that you’re too young to start thinking about retirement. This is a good time to find out what financial habits you have that need to be changed.
In 2003 Erik Hurst did research on how people spend and save. He found that we all pretty much fit into two general groups. The first group consists of those who try to make the most of their money and save something for emergencies. The rest are in the second group. This second group consists of those who really enjoying spending any extra money that comes along but then find themselves with nothing to take care of the emergencies that arise. People in the second group, which is about twenty percent of the population, are those for whom it would really make sense to start saving early so the habit of spending everything can be broken in good time.
If you find yourself repeatedly without money when emergencies arise, perhaps it is time to take a good look at your financial habits. Hurst found that “households who enter retirement with lower than ‘nor- mal’ wealth do so because they had consistently followed near-sighted consumption rules during their working years... these households had similar opportunities to save” as the households that entered retirement with sufficient savings. In other words, these people always had poor saving habits and spent all their income rather than saving any, even when they had opportunities to save. Spending was a habit they never changed. If you need to change your spending and saving habits, the time to start is now.
When Should I Start Saving for Retirement?
The truth is, the longer you wait to get started, the more interest on your savings you’ll lose over time. Setting aside too little too late is one of the most common mistakes people make. That means a lot of us do
Financial Planning for Retirement 47