Updated: Jan 12
A new year and new resolutions! Saving should be a part of a new thing... knowing that something new always takes risk, lets look that the reward.
Starting early is the right thing to do. Maximizing time and the "Rule of 72" provides a jump start that provides many beneficial returns.
Waiting to get started in retirement savings can and will make a big difference in how much you will be able to accumulate once you hit your “golden” years.
Join the Pilot – Saving for Retirement
Should you procrastinate referencing your saving for retirement? No. The right time to start is always NOW! So you are young, as I was, thinking that I would live forever, until the reality of procrastination crept upon me. I didn’t take seriously the free “match” made available with my company, and lost out on some important years that I could have accumulated more in savings.
Did you know that if you are 30 and save 10% of your $50K annual income into a tax-deferred savings account, (assuming 6% rate of return and 1.5% salary growth) you could have as much as $1.1MM by age 67. Start just 5 years earlier and it could add an additional $400,000.00 to your total. Starting later by 5 years (35) will decrease your net to around $717,000.00 by 67.
This leads to the “Top 5 Dumb Money Moves”…
1. Don’t have savings automatically taken out of your paycheck.
2. Don’t participate in your companies’ free 401k, (403b) match. Throwing away free cash is always stupid.
3. You have all your retirement money invested in YOUR COMPANY stock.
4. You have all your retirement money invested in stocks with no bonds, or other
5. You don’t have an emergency fund.
3 of the 5 involve retirement planning… the other 2 reflect a lack of a savings plan.
There is an opportunity for many that don’t have company match opportunities, and those that may not have tax-deferred savings opportunities now. In California, look for information about CalSavers. Check with your local United Way office, and request information about an opportunity to plan for retirement through an alternative (free) form of savings for retirement. You will find that the opportunity will improve your “time” in the tax-deferred savings arena, and provide a respite for alternate income needs after retirement.
“CalSavers was designed to give Californians an easy and simple way to save for retirement.Starting in late 2018, California will launch a pilot program that will begin the process of offering an estimated 7 million workers in California the opportunity to contribute to an Individual Retirement Account (IRA) and get on track for the future.”