It can accumulate at least 50% more than if it starts at that early age, than if it is done after the age of 40. The important thing is to have clear goals.
Even if you are part of the 2,474,000 people affiliated with the Ecuadorian Social Security Institute (IESS), you should think about save money, individually, a part of the income to have sufficient resources when the hour of the retirement.
Currently, the pension The average paid in the country is $ 655.20 per month, but the needs of a person from the seniors (65 years or older) can exceed $ 700, as a result of growing medical expenses, among others.
According to a worldwide study by the Nationwide Retirement Institute, the average age for Latin Americans (including Ecuadorians) begin to worry about whether they will have enough for their old age is 31.
However, only 20% commit to save money from that age; And in most cases, they realize that they will run out of money only when they are over 40 years old.
Therefore, one of the most important recommendations is that you begin to accumulate money for the retirement as early as possible, that is, from the age of 18.
That importance can be better understood with a concrete example. Marcelo and Sebastián made the decision to save money for your retirement. Marcelo started with $ 25 a month when he was 18 years old and Sebastián with $ 100 a year when he was 45 years old. Marcelo and Sebastián invested in a policy that paid them an annual interest rate of 7%. At 65, Marcelo will have $ 77,103.89 and Sebastián will have $ 52,092.67.
What to do to have a decent retirement?
If you start from the age of 18, in theory you are 47 years old to save little by little for your retirement. On the other hand, if you only commit yourself from the age of 30 or more, the period to accumulate resources is drastically reduced.
1. Find your reason
A popular saying says that “each head is a world”, so that people’s actions are not driven by the same reasons; each has their own. In this sense and for the retirement, young workers must envision their future and find what motivates them to save money.
They might want to travel, insure their health, buy a retirement home, or all together. Each of these things comes at a cost, so that should be reason enough to start reserving resources now.
2. Get informed
With technology in hand, we make the mistake of informing ourselves only through social networks. Although not all the information is wrong, it is better that you look for more suitable sources such as banks, insurance companies, stock market on your own. Even if you can, you can seek the help of a financial advisor to create a financial plan. retirement according to your possibilities.
3. Save, save and save
For any young person entering the world of work, the idea of earning their own money is very attractive: going to a party, to the movies, to dinner and paying for whatever activity or taste you want. However, they lose sight that this lifestyle is fleeting and will not be able to maintain it in the future if they do not begin to appreciate the idea of saving.
Methods of saving for retirement
The financier Kimmie Greene developed the so-called ‘Greene formula’ to determine the level of saving that a person should have based on their age.
According to this formula, it would be advisable that between the ages of 18 and 20, 25% of the annual salary be saved, and that at 30, 100% of the annual salary be achieved. Then, according to the analyst, each citizen must save money a gross annual salary every five years.
Thus, at 35 you should have double, at 40 triple, at 45 quadruple, at 50 fivefold, at 55 sixfold, at 60 sevenfold and at 65, eight times the salary annual saved.
Another type of saving is establishing increasing percentages. At age 18, you should start with 5% of salary; at age 25, go to 10%; at age 30, to 15%; at 35 years of age climb to 20%; and from the age of 45 consider a minimum reserve of 25%.
This should be combined with various types of investments such as accumulation policies or long-term deposits.
The private insurance market also offers retirement plans linked to life insurance. This is a second option to guarantee income for old age, since the insured will have at their disposal an accumulation fund at a certain age. These funds offer an interest of at least 3% per year.
A third alternative is to invest in a mix of stocks in the stock market. In the long term, one of the most profitable options is to invest in the equity of a company, through the purchase of shares. (JS)