It’s too early for me to start saving for retirement!” is the biggest lie many 20-something year olds keep telling themselves.

The fact remains, the earlier you start saving for retirement the more money you will have when you eventually decide to stop working.

When young people hear about saving for retirement, they immediately think it’s for old or older people, and this is far from the truth.

Retirement simply means leaving one’s job and this will be a reality before you know it, hence the importance to prepare for the transition early to ensure you can enjoy the same level of comfort that you were used to, if not better.

The decision to sacrifice part of your current earnings for future goals and especially retirement is something we should put more effort in, to enjoy a great lifestyle at retirement. Retirement may feel a long way off, but there are a couple of reasons why retirement planning is particularly important, especially for young people.

Here’s why you need to save now for retirement:

1. You are young and the future is in your hands… compounded!

Seemingly tiny contributions made at an early age will over the years multiply… "The power of compound interest”. Therefore, the sooner you start saving and investing, the earlier you take advantage of compound interest; making it easier to achieve that financial goal. For example with our Jubilee Insurance Personal Pension plan if you are 20 years old and contribute Sh 2,000 for 20 years, you will have Sh1, 261,973 by the time you are 40 years old. If you decide to contribute the same amount but for 30years, you will have Sh3, 087,072 by the time you retire at the age of 50.

2. You have a wider choice of investment options!

A longer time to invest means that you can take greater risks with the investment instruments that you select. This is because you have more time to bounce back for greater gains in case things head south.

Those who start late usually have little wiggle room and tend to stick with the generally safer and more restricted investment vehicles.

3. You can have guarantees on the returns on your savings

A number of retirement plans give absolute guarantees on minimum rates of return. So when it comes down to the money, you can never, on retirement, have a total fund that is less than your total contributions.

4. You are still the master of your budget

The babies are not yet here, the mortgages have not yet come through and your monthly shopping budget very possibly has only you as the consumer.

It is easier to quickly make retirement savings a permanent item on your budget without having to struggle with so many other expenses.

An early budget provision for retirement savings will quite literally get you off the "not enough therefore no savings” mind set.

5. You get "free” money from your employer

Many employers contribute to their employees’ retirement accounts. When you choose not to contribute towards your retirement, you are quite literally saying "NO!” to money that the employer is freely giving to you.

6. You will pay less tax

The Government, which most of us feel takes too much from us, actually gives tax breaks to all who contribute to retirement schemes. You can get as high as Sh.20, 000 as a relief before your salary is assessed for tax! Fr example, an individual earning Sh50, 000 and making a monthly contribution of Sh.5000 will be taxed on Sh 45,000.

7. You will be free to do as you please… for the rest of your life

Many of us aspire to spend the years after retirement travelling the world or living in that Villa. No one dreams of a "broke” future.

With an early saving and investment strategy, starting now, Your Dreams are valid!! You can start living it up and "retire” as early when you are ready. How’s that for a reason!

Jebet Cheruiyot is pensions manager at Jubilee Insurance.

The views expressed in this article are of the authors and do not necessarily represent those of The New Times.