Money Mistake Monday – The Oh Crap I Waited To Long To Save For Retirement Syndrome.


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!

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Comments (13)

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  1. Mrs. Micah says:

    In the big picture, 28 isn’t bad at all. However, I’m working on getting my first Roth (saving for initial deposit) and am only 22, so I guess I’m off to a good start. 🙂

  2. There are only so many variables in the saving/investing equation. You can figure out how to generate a huge income or you can get a phenomenal rate of return on your investments or as David recommends invest regularly and invest early. Compounding works when you have a reasonably long period of time to invest.

    Agree with Mrs.Micah – you are doing great to have figured this out at 28!

  3. Bo says:

    David, better late than never!

    I am all over my Roth, 410k, stocks, and mutual funds, but I have a question. You mentioned an Index fund. I have heard of them before, and heard they can have a good return. But what are they? And what are some good ones to look at?


  4. david says:

    Index funds are just mutual funds that track certain index’s such as the S&P 500 or the Wilshire 5000. Normally over time it’s a solid investment, depending on the index. I am not an adviser so I don’t want to give out specific funds, but personally I have an index fund that follows the S&P 500, for example.

  5. Laura says:

    I found out the hard way that managed funds eat up your funds and don’t even give returns to justify them. Index funds are the way to go.

  6. Debbie says:

    The great thing about index funds is that since they copy an index, no high-priced finance guys are required to do the stock picking. It’s all automated. So the fees can be kept very low (although some aren’t).

    So just find the ones with the lowest fees if you want to maximize your returns. (Vanguard and Fidelity are popular.)

    You can get one broad-based one to copy the market. Or you can separate your funds into different sectors that you rebalance periodically so that you’re buying low and selling high. For example, you can keep half your money in a growth fund and half in a value fund. Or you can break it up into technology, health, utilities, etc.

    Me, I didn’t start until I was 33. I thought I should pay off my student loans first. Then save for a car. Then save for a house. And then start saving for retirement. (Good goals, not the best order!) Even then, I was chicken and started with an amount I wouldn’t mind losing (as if the stock market might crash into nothing). Finally at age 36, I started maxing out my IRA (which back then required only $2000/year(!), but which I have managed to keep maxing out).

    I have had forced pension savings since I was 27, but I surpassed those with my IRA savings at age 42. Then at age 44, I started contributing to a new Roth 403(b). My pension is totally awesome if I can just stick it out until I am 52 (it will pay for everything my salary now covers except mortgage payments, which will be over by then, and retirement savings), but meanwhile I am trying to save enough so I can retire at that age even if they change the rules on me or something.

    You’re doing great. I know, because I’m doing better than everyone in my family, and you’re doing better than me!

    Note: even teenagers can have IRA’s if they have earned money.

  7. David says:

    Thanks Debbie for all the info, and glad I seem to be doing OK! I hope these comments are an inspiration to everyone out there who has not started yet!

  8. […] My Two Dollars has ideas about waiting too long to save for retirement. […]

  9. David, great post, but I wouldn’t say “invest into Roth IRA or index funds,” unless you meant index funds through your Roth IRA account. Besides the fact that Roth IRA would be funded automatically, so you don’t need to decide each month whether you’d like to contribute this month or not, its biggest benefit lies in the fact that your money is being compounded tax-free: you will not be taxed on your gains when you invest with your Roth IRA account. Maybe that’s what you meant as well, but I just wanted to clarify it for everybody.

  10. David says:

    Thanks for the comment Creative Investor…I actually meant either or, as a basis for savings in general. But yes, if saving just for retirement, you should always consider the Roth for the reasons you listed over a regular mutual fund. Thanks for the clarification!

  11. Fathersez says:

    Yes, I agree. Starting early is the key. Starting at 28 and Mrs. Micah’s 22, is excellent. At this age, most of us think we are indestructible. There is no thought on building a future. Maybe we may think of some promotions and stuff like that, but serious savings….

    I missed the first boat, then the next few ones. But at least I started.

    Now my wife and I want to ensure that our children, will take the 1st boat, even if they have to be carried kicking and screaming.

    Thanks for this post.


  12. […] presents Money Mistake Monday – The Oh Crap I Waited Too Long To Save For Retirement Syndrome. posted at My Two Dollars — David offers one piece of advice: “I know retirement seems a […]

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