“Twenty-one percent of those surveyed who have not retired have saved nothing for retirement and 44 percent have saved less than 10 percent of their salary.”
This quote is from Financial Advisor Magazine talking about a survey done by TIAA-CREF. How do people think that they are going to live in retirement? Do they plan on retiring?
Regardless of how old you are, it’s better to have something rather than nothing. Take a look at how much the Social Security Administration will pay you in retirement and you tell me if you can afford NOT to invest an extra $50 per month in your 401k, 403b or IRA.
Let’s take a look at the numbers, shall we?
Start Investing Per Month % Return Value at 67
18 $50 9% $536,841.50
21 $50 9% $408,642.74
30 $50 9% $178,618.62
40 $50 9% $68,888.51
50 $50 9% $24,125.50
It’s pretty simple:
- If you have a 401k or 403b at your job you probably have a match. Investing a few dollars every pay period lowers your tax base (instead of paying Uncle Sam you invest in yourself) and your company will contribute a few coins to every dollar you invest. Start early. Invest often. Check and see how much contributing $50 or $100 each pay period will change your take home pay. There won’t be much change in how your check looks every two weeks, but it could change how your retirement looks.
- If you don’t have access to a 401k or 403b then open an Individual Retirement Account (IRA) at a brokerage house that you trust. You have to fill out a two page application and send over a voided out check. You can open many accounts by promising to contribute at least $50 per month. That $600 per year could grow into 5 or 6 figures using compound interest. Start early. Invest often.
If you are thinking about investing and you’re not sure where to start:
- If you are a member of a credit union: contact Balance for FREE help.
- If you have an Employee Assistance Program (EAP) at your job: contact the EAP for FREE help.
- If you do not have access to these: find a fee-only financial advisor for help.
You can create the life you want.
You are powerful.
Go get it.
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Shay Olivarria is the most dynamic financial education speaker working today. She speaks at high schools, colleges, and companies across the country. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, NBC Latino and The Credit Union Times, among others. To schedule Shay to speak at your event visit www.BiggerThanYourBlock.com
Stop making investing complicated.
Money management is simple.
Folks will try to make it seem more complex than it is by using financial jargon and complex terms for simple time-tested strategies, but the truth is that becoming wealthy through investing is really easy. For years I have been advocating a simple investment strategy in my book Money Matters: The Get It Done in 1 Minute Workbook:
– Choose a no-load mutual fund from an investment firm that you feel comfortable with and has a good history.
– Start investing in a tax-deferred account (401k/403b/IRA) as soon as you have earned income.
– Invest something every month. Even if it’s the minimum (usually about $50).
– Keep your eye on your money, but don’t worry.
It sounds crazy that investing can be this simple, but it is. There’s no “magic bullet” that will make you a millionaire and anyone that tells you there is one is more than likely a liar. You have to be willing to set a financial goal and then work toward reaching it by paying yourself first and making sure that you are spending waaaaay less than you make.
It’s not rocket science, but most people won’t do it. Not because it’s complicated, but because it’s easier to believe that you can’t be wealthy than it is to work to make it happen. If you’re thinking about investing and you’re a questioning yourself remember this: K.I.S.S.
Work smarter, not harder.
Raise your hand if you save money in your savings account and then transfer it to your checking account so often that you don’t actually end up saving any money. Put your hand down! Your co-workers are looking at you!
What’s a money market account?
A money market account is an uber-savings account. You put money in and take money out using a debit card and/or checks just like a savings account. You can only make a specific number of deposits and withdrawals per month. Due to that restriction, you earn a better interest rate than a savings account.
Why should I use one?
You should open a money market account because you have little-to-no willpower. Do you know how I know this? It’s because I have little-to-no will power as well. Life is not about beating yourself up about your shortcomings, but about finding work-arounds for the shortcomings that we all have.
I know that if I have thousands, heck, if I have hundreds of dollars lying around in a savings account that links to my ATM card I’m going to be really tempted to buy things that I don’t need. Having a money market account, with restrictions, makes me think a bit harder before I spend my money because I have to consider fees and penalties for taking money out.
Where to find a money market account
Money market accounts are offered at credit unions and banks around the country. Before you choose one, check Bankrate.com to make sure that you’re getting a competitive rate.
– Don’t sign up for a debit card for your money market account. It’s too tempting.
– Keep your money that you’re saving for a short-term or intermediate-term savings goal in a money market account.
Read more simple money management tips in Money Matters: The Get It Done in 1 Minute Workbook.
I firmly believe that each of us has a right and a responsibility to manage our money well. I also believe that the financial services industry has an obligation to present the information in a way that makes it easy for the average person to understand.
We should all be able to:
– Understand where the taxes from our check go
– Calculate our net worth
– Make sound decisions about saving/investing for retirement
– Understand the basic workings of the stock market
– Understand how our credit scores are calculated at the 3 top credit reporting agencies
– Understand how our feelings about money effect our behavior
– Advocate for ourselves from a place of power and knowledge
If you’re working with people in the financial services industry that can’t explain what’s going on in a way that you can understand, get someone that can. Money management is easy.