The earlier you plan for retirement, the better

This was originally published on Monday, October 15, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

For some of us, retirement is many years away. For others, retirement could be coming up quickly or it may have already happened.

No matter what stage you are in your life, it is never too late to make saving for your retirement a priority. It doesn’t take large amounts of money to save up for your retirement. The key is to start, and the sooner you start the better off you are.

Ideally, you want to start saving for retirement when you start working in your early 20s. Depending on your salary and expenses, you should create an emergency fund. This emergency fund should have roughly three to six months of your living expenses saved up.

Set small milestone goals to help you reach your ultimate emergency fund goal. An emergency fund gives you piece of mind when an unexpected event happens

Retirement account

The next step is to start a retirement savings account while you are saving up for your emergency fund. Sometimes your employer will offer a retirement plan, other times you will have to look around and shop for a plan.

The most common types are individual retirement accounts, 401(k)s and, for those in federal government, the thrift savings plan. Each allow your money to grow by using compound interest and are tax-deferred. The magic of compound interest is that no matter how little you contribute, it adds a percentage to the total amount of your savings.

If your employer offers a match to your contributions, take full advantage of it, as it too will be added to the total amount. Where else can you get a 100 percent return on your investment?

Those who start in their 20s are at an advantage to save more toward retirement because they aren’t tied down to a mortgage, children and other responsibilities. They also have time to assemble a portfolio of mixed assets — stocks, bonds and money certificates.

Set financial goals

Sit down and decide your financial short- and mid-term goals. Do you want to buy a house, a car or pay off certain debt? Also, identify the expenses you will have during your retirement years — housing, utilities, and medical bills.

Think of your contributions as paying yourself first. If you get a raise, receive a bonus or a boost to your income, you should increase your contributions. Every year, increase your contribution by at least 1 percent.

These decisions are important. Seek the help of a financial professional to help you clarify the confusion and to point you in the right direction.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at and read past columns at the Money Matters blog at


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