Imagine what your future would be like if you could convince your client to start saving for retirement now.
Just think of how much better off (s)he would be later on in life if you were able to get the person started preparing today for their financial security tomorrow.
(S)he may think that saving for retirement is not too important and that it will just happen someday. But the truth is that someday your client will want to retire and to do so with any amount of dignity, it is vital that you help the person get started now.
In fact, wise millennials are already planning for retirement. They see 5 major benefits to preparing for retirement today. Let’s explore each of those 5 reasons so that you can share them with your client.
1. Inflation
Despite consumers not wanting this point to be a reality, inflation continues to rise. This affects your client’s retirement. To stay ahead of inflation, (s)he will want to plan for retirement now. It is better to start early and beat inflation than to start late and be playing catch-up.
2. Your Client May Need More Money than S(he) Thinks
Life-expectancy is higher than ever. This in addition to the concerns with inflation mentioned above means that your client may end up needing more money to retire than what (s)he thinks. If the person believes (s)he doesn’t need as much, (s)he may put off planning for retirement until it is too late. But by recognizing the reality that your client may need a lot more than what (s)he may think, you can help the person make a move and begin planning for retirement today.
3. Intentional Planning Puts the Ball in Your Client’s Court
By waiting, (s)he is essentially saying that “it will just be okay,” or, “it’s all going to work out somehow.” The problem with this is that it relieves your client of the responsibilities of taking care of his or her own financial future. When you begin helping the person plan for retirement, you give your client ownership of the situation – ownership to decide exactly what type of retirement (s)he is going to have. You empower your client to make the decision today as to whether retirement will involve eating lobster in Tahiti or spam in their uncle’s garage.
4. A Lower Taxable Income
Everything put towards retirement is tax-deductible income. If your clients waits, (s)he will be taxed on all earned income this year. But if (s)he puts it into retirement now, the person will get the tax benefits now as well. Every year your client waits, (s)he ends up giving the government what could have been given to oneself for retirement. The earlier your client starts preparing for retirement, the sooner (s)he will benefit from the tax breaks available.
5. Compound Interest Keeps Compounding
Financially speaking, this is perhaps the most important point to consider. The secret to winning with compound interest is to start investing now. This is an oversimplification, but basically it may take 20 years for your client’s investment to double because of interest. Then, that entire amount will completely double again in only 9 years. Then, it will all double again in 4 years. Etc. It takes time to get the snowball rolling with compound interests. But if (s)he starts early enough, that snowball will turn into an avalanche of financial freedom after retirement.
So, planning for retirement is a wise investment of your client’s time and money. And the sooner (s)he starts, the better off (s)he will be. By getting the process started today, your client will get ahead of inflation. And since (s)he may need more money than (s)he thinks, it is important that you help the person to take ownership and responsibility for their own future financial health. What your client invests will give tax breaks, and the interest on their investments will begin compounding the moment they begin. So why wait? It is better for your client to start now and have more than (s)he needs later than to wait until later and end up with not enough in the end.