I have no idea what’s in store for me, I don’t know when or if I’ll get married or have kids. Right now, I want an awesome kitchen, so that’s my present motivation to save. That may change in 5 years time. If that changes to “I want to sell all my belongings, quit my job, and travel the world” then I’ll have some money stashed away to be able to do that (at least for a period of time). Saving gives you opportunities. It is also prudent to start saving now for retirement. For people retiring at age 60, they could easily live until 90 or 100, meaning that their retirement could last as long, or even longer, than their working life. That’s a lot of pressure if you only start saving after you’ve paid off a mortgage and sent your children to university. Forbes featured an article titled “My Biggest Financial Regrets From Near-Retirees”, where 2 out of the 3 interviewed cited not saving enough or starting early enough as their biggest regrets. Unless you work for the government or one of the few remaining companies offering pension plans with predetermined benefits, the onus is on young professionals to manage their money well enough to be able to retire when they want.

Recently, I was talking about the topic of retirement with a group of entrepreneurs. One of them asked, “Are you ever planning on retiring? I’m not”. Most in the room agreed with that statement. However, in my view, I wouldn’t risk assuming that I will want to or be able to work for the rest of my life. By saving now, and throughout your career, you are giving yourself the opportunity to transition from having to work to choosing to work, something commonly known as financial independence. Financial independence means that you live off of your wealth, without having to actively work in order to meet your basic needs. If you want to continue working, you can; if you would prefer to retire and volunteer full time, you can; if you want to offer your services to that brand new start-up that can’t afford to pay you a salary, you can. These options, and others, are available because you’ve built up solid financial assets to support yourself.

Most advisors or financial planners want to know what your goals are to figure out how much you need to save and what investment return you might need to earn on those savings. But for many young professionals, you may have no idea what your goals are or where life will take you. If you’re thinking about putting money away for retirement, it’s almost impossible to know what your lifestyle will cost you, say, 40 years down the road. According to a recent study from Abacus, yconic and The Globe and Mail, 68% of Gen Y respondents between age 25 and 33 expect to retire by age 70. That means the 60% of people in this age group that aren’t currently saving for retirement need to start, even if their retirement goals are undefined. I outline a simple saving/budgeting idea in more detail in another post that addresses this.

Young professionals often have the “you only live once” view. I agree with that, but my stance is a bit different. To me, “you only live once” means that 1. When you are older and do not want to or cannot work, you don’t have the opportunity to go back in time and save more money and 2. I don’t want to miss out on big opportunities, so I save now to be able to capitalize on them.