When should I start saving for Retirement?

When should I start saving for retirement?

We hear this question often. The simple answer is to start saving as early as possible. The sooner, the better. Here’s an example for illustration purposes. Let’s say the plan you and your agent set up calls for you to accumulate a certain amount in cash value inside your Index Universal Life Policy to allow you to have a healthy tax-free retirement income. If you start this at age 20, you will need to spend much less per month than if you start it at 50. Here’s the illustration:

Retiring at 65, Accumulation target: $1 Million at an average 8% interest compounded monthly.

Starting Age 20 – $192/month

Starting Age 30 – $433/month

Starting Age 40 – $1050/month

Starting Age 50 – $2917/month

So let me ask you this question: What’s easier to come up with? $192/month or $2,917/month?

This method doesn’t mean on your 10th birthday, open a Roth IRA and deposit your $5 allowance into it. But by the time you’re in your early 20’s or even before then (16, 17, 18), you should know how you will start saving money for your future. Are you going to go Pre-Tax or After-Tax? What does that even mean? As a young person myself, I understand. Finances can be confusing. However, it’s one of the most important lessons you will ever learn. Yes, more important than school. School courses do not teach you much in terms of finances. That is unless you pay for a class to help you manage your finances.

Pre-Tax vs After-Tax

There are several ways to save for retirement. You can enroll in a Roth IRA, a 401K, stuff money under your mattress, or even play the stock market, and that doesn’t even begin to scratch the surface of ways to build up your wealth.


Life Insurance

Pre-tax accounts let you defer paying taxes until you pull the money out for retirement. These accounts include IRAs, 401Ks, 403Bs, and even Pension Funds.


After-tax is when your bank sends a 1099 form each year. This form contains all the interest accrued for the year. You must report this income on taxes each year and pay taxes on them. “After-tax dollars can be invested in just about anything: CDs, savings accounts, mutual funds, stocks, bonds, real estate, annuities, and much more.” states The Balance.

Where Should I Invest With Life Insurance?

Investing can be complicated, but it’s necessary for your future financial growth. Choosing the right investment plan is paramount. If you mess this up, you could mess up your entire future and doom yourself to work forever. No pressure. But in all seriousness, ensure you have the right investment plan. Never put your eggs in the same basket. Financial markets shift. That’s just the way of the world. So be careful.

Life Insurance Questions?

We hope that this information on life insurance was useful to you.

If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.

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This article was updated on 6/7/2024.

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