The Secret to Helping Your Family: Help Yourself
We’ve all heard the old yarn: if you want to help others, you need to help yourself first. But that doesn’t make it easier – particularly if you have several generations worth of family members to worry about!
But financial prioritization, especially when it comes to your own future, is critical. In this article, we’ll show you how sticking to your retirement savings plan can make a big difference, and what you can do to make the task of sticking with it with it a little easier.
Why delaying can cost you more than you think
You know how important retirement savings is, but – like so many of us – you’re pulled in a lot of different directions. That can make it easy to let your savings rate stagnate, or even fall. Maybe you stop saving altogether for just a while, only to find that it’s a few years later and you’ve never gotten started again.
The costs of those delays are real.
For example, let’s say you make $50,000 a year and you want to save 10% of your income for retirement. You were doing well until life took over, and now you haven’t saved for 2 years.
It seems like it’s just $10,000. No big deal in the grand scheme, right?
Well, depending on your age, that $10,000 could actually be a lot more. If you’re 40 years old and plan to retire at 65, that money is losing out on 25 years worth of growth potential.
If you were to earn an average of 7% per year over that two and a half decades, you’re not talking about $10,000 anymore.
Suddenly, you’re talking about $54,000.
In other words, for every year that you save less than you should or not at all, you’re not just losing out on the money you set aside. You’re losing out on any potential investment returns on that money!
Saving More: Where to start
But where to start?
One easy way: save your raise.
Instead of letting that extra money find its way into your paycheck, raise your 401(k) or other retirement savings contribution automatically. You won’t miss the money (you never had it anyway) and you’ll have the benefit of saving without feeling like you’re sacrificing your lifestyle.