Today’s installment of Money Mistake Monday has to do with saving for retirement. Sure, it seems like a long way off, but the earlier you get started, the easier it will be to reach your necessary goals. A lot of young people cannot see the future that far out, and that is why they put off starting to save for retirement, and I was one of them. I did not start really saving for the future until I was 28 years old…6 years after getting my first full-time “real job”.
Unfortunately for me, my first 2 real jobs after college did not have 401K’s, so I was not even given that option. Instead, I spent my money on cool electronics, expensive vacations, the newest computers/cellphones and other assorted things that were not necessary. Add in the expensive girlfriend from last week, and it all adds up to a big wake-up call when I turned 28.
Starting to save for retirement/the future at 28 is not really that bad compared to some people who start much later. But those 6 years would have given me a hell of a headstart on my retirement plan. Even if I had been able to put away $50 a month, I would have already invested $3,600 in principal by 28, never mind the interest accrued over that time or over the next 30 years. But I didn’t, and now I probably put away a lot more than I would have to if I had started earlier. Fortunately, I am able to put the money away, but life throws curveballs sometimes, and if I wasn’t able to today either, I would be in a lot of trouble come retirement time.
A piece of advice for those just starting their careers or only a few years along: I know retirement seems a long way off, but trust me on this – you want to start investing NOW. Immediately. As in, TODAY. If you can only afford $50 a month, sock it away. If you can do $50 a month comfortably, go for $75. If your company offers a retirement program, take full advantage of it to get their matching funds. On your own you should open a Roth account asap. Try an index fund as well. Just start doing it!
Years ago I wish I knew what I know now; don’t let that be you. There are plenty of websites and information out there to help you get started, but do not delay. A minimum investment today in the early years will save you from trying to play catch up later on when you have a spouse, some kids, and a mortgage. Take advantage of time, and it will pay you back handsomely!