Nearly half of all American workers don’t contribute to their 401(k) contributions, which would then be matched by their employer dollar for dollar. This is leaving a lot of money on the table. It’s a sad situation because people who work hard to earn their leaving deserve to have a nice retirement. Think about it! How hard do you work everyday, spend long hours at job at the expense of family, and ensure you have good life now and in the future. But if you don’t start saving early and continue to do so through your earning years you might miss out on the opportunity to have financially secure retirement. So how can you make people remember to save for retirement?
- Educate Yourself. Spend some time looking at the way compound interest Because stock dividends get reinvested, a pool of money you are saving up for retirement in the form of ETFs and mutual funds grows like a snowball rolling down a hill. It starts out small, but as it gains more surface area, it can take on more snow faster, the farther it rolls. This is called an exponential level of return. It’s important to get this idea firmly into your mind. It makes sense. The more money you earn, the more money you have to earn other money with. Most people think in terms of linear effects. But by appreciating the exponent, you can get a lot more excited about retirement savings. And the fact that your employer may double your monthly contributions means that your efforts are multiplied by two before being applied to your exponent. Compound interest is powerful. Take advantage of every retirement savings opportunity and let it work for you.
- Automating the process. Looking at a retirement calculator may convince you that retirement savings is important, but it won’t make you remember to put aside money every month. If you think that consistency is going to be a problem for you, why not automate your retirement savings, just like you would bill payments or rent. By automating a $500 payment monthly, right after my mortgage is paid, I’m able to more than meet the maximum contributions for my IRA every year. Whatever your retirement savings goals, automated contributions make the whole process a lot easier. You don’t have to keep any dates in your head. You just know it is getting done. You’ll thank yourself later, when you’re retiring with a ton of money in your pocket.
So don’t let more time go by without making a plan for retirement savings. Educate yourself about your options, figure out how you’re going to proceed, and automate the process. You’ll be glad you did, and your future will be much more secure.
