I recently had a relative scoff at me and my husband for meeting with our financial advisor. This relative… who is a lot closer to the age of 50 than I am, has ZERO dollars saved for retirement. She says that she can’t afford to save money for retirement… that she’s “investing in the phone company and the public utilities.” (As if we don’t pay our phone and light bill!)
Her comments were totally jarring to me. Can’t afford to save money for retirement? How does she expect to afford LIFE when she is no longer able to earn money? She must be – as author Dave Ramsey puts it – planning to read the “75 ways to serve Alpo” book.
My husband and I have been contributing to our 403(b) plans since we started our jobs. According to our financial planner, we are right on track to have a comfortable retirement, even if I don’t return to work for awhile. And the estimates don’t factor in any Social Security income we may get.
He also showed us why it is so important to save money NOW rather than later. For example, if you put away just $100 a month starting at age 25, based on average returns, you will have approximately $325,000 saved up by age 65.
If you wait to start saving that same amount until you are 45, you will only have about $57,000 for retirement.
You can’t afford to wait to save. You have to find money to put away for retirement NOW. Cut back on your soda or coffee consumption, cut out a few magazine subscriptions, shop around for better insurance rates…. and take that extra money and put it away in a good growth mutual fund.