Why Is it Important to Invest Money for Retirement?

Why Is it Important to Invest Money for Retirement?
••• John Foxx/Stockbyte/Getty Images

The reason you might not want to start saving for your retirement at a young age -- quality of life -- is the exact reason you should. When you first start earning money, you want to enjoy it, spending it on things and activities that let you have some fun, rather than just using your money to pay bills. If you want to enjoy the last years of your life, however, it’s important to start saving even small amounts when you’re young, or you might have a disappointing lifestyle when you’re a senior citizen.

Savings Won’t Cut It

Based on how much retirement money you will need to live for decades without working, you probably won’t be able to live on savings alone. The interest on your retirement contributions and other investments will play a big role in determining when, and even if, you can retire and pay your bills. Simply putting your money in a savings account, rather than investing it, puts you at risk for a difficult retirement.

The Multiplier Effect

The sooner you start investing your money, the longer it will earn interest, the more money you’ll have when you retire and the less cash you’ll have to contribute to your retirement account as you get older. If you wait until you’re older to start saving for retirement, you’ll have to put more of paycheck toward retirement because you’ll have less time to earn interest on that money. This will cramp your lifestyle before you retire, because you’ll have less to spend on yourself and your family during your working years.

Quality of Life

Your retirement years can be the best of your life if you don’t have to worry about going to work every, dealing with a nagging boss and wondering if you can pay your bills. If you invest wisely, then when you retire you can take trips around the world, start a new hobby, open a fun business, donate your time to charity and do the things you want to do, rather than things you have to do. If you don’t take your retirement seriously, you might find yourself having to live with your children, in a public retirement home or stuck in your house with little to do because you don’t have much money.


By the time you retire many decades from now, there’s no telling whether government programs such as Social Security, Medicare and Medicaid, which help seniors financially, will exist. Jobs in the field you major in during college might dry up because of new technologies or foreign competition. The U.S. might not be the leading economy and able to provide high-paying jobs by the time you’re ending your career. The real estate crash of 2008 and massive recession that followed might not be one-time events. Saving for retirement and investing your money wisely will allow you to better prepare for an unforeseen future.

Health Care Issues

Because of improved health care, better nutrition and healthier lifestyles, Americans are living longer lives. That doesn’t mean you won’t have to deal with the health-related diseases and conditions that come with old age. The more you save for retirement, the more you can spend preventing and treating health issues to make sure your senior years are the best they can be.