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Teens Encouraged to Consider Saving for Retirement

It’s never too early to start saving for retirement. You may have heard many people utter that statement before, but it’s likely that few people think about applying it to teenagers. While teens are generally more focused on the here and now, UBTC encourages teens to think about starting their retirement savings now so they can secure their future. 

3 Reasons Teens Should Start Saving for Retirement
Simply put, the earlier you save, the more money you will likely have in the future. Following are three reasons why it’s a good idea to start saving now by putting money in an individual retirement account or Roth IRA.

Create a habit of saving — The earlier you learn to save, the more likely it is to become a long-lasting habit. If you see your money start to grow in a retirement account as a teenager, you may be more inclined to participate in an employer-sponsored 401(k) once you start your career.

Learn time value of money — The longer money stays invested, earning interest, the more it will be worth in the future. For example, $2,000 invested in a retirement account at age 15, assuming a modest rate of return of 2.5% with a monthly contribution of $100 will be worth $126,290 by age 65. The same amount with the same rate of return invested at age 25 will be worth $87,773.

Flexibility — The earlier you start saving for retirement, the more flexibility you will have with your investments. If you choose to focus on higher risk investments that can yield higher returns on your money, you will have more time to recover losses if stocks drop due to economic conditions.

More Information
Before you open a retirement account, be sure to consult a tax adviser to confirm eligibility. To learn more about saving for retirement, you can contact any UBTC location or visit us online at