retirement

Overcoming inertia to save for retirement

Entry-level Emily: Too little earnings
Entry-level Emily: Too little earnings © michaeljung/Shutterstock.com

Don't ever think you're too young to save for retirement. As a new worker, "entry-level Emily" has something far more valuable than her experienced superiors: time. A 25-year-old worker who saves $5,000 a year throughout her career will amass nearly $1.3 million by the time she's 65, assuming 8 percent annual growth. If she waits until age 35 to save, she'll accumulate less than half that amount -- $566,416 -- assuming the same return.

Bottom line: If you're just starting your career, don't walk -- run -- to open a retirement account.

Grab free money. Have access to a 401(k)? Save enough to qualify for your employer's matching funds. That's typically 50 cents for every dollar you save, up to 6 percent of earnings.

Automate your savings. If you don't have a 401(k) plan at work, set up direct deposits into an individual retirement account at a brokerage firm before you spend your whole paycheck.

Go for growth. "An entry-level worker should put 100 percent of their retirement fund in equities," says CFP professional Drew Tignanelli, president of Financial Consulate in Hunt Valley, Md. The reason: Stocks grow more over time, and you're young enough to ride out dips in the market.

Rough it. Saving early is potentially worth millions, so make sacrifices now. "Keep eating ramen noodles, and save like crazy until you're 30," says Rick Kahler, president of Kahler Financial Group in Rapid City, S.D. "Then you can look at upping your lifestyle."

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed, 0 point 4.32%  0.06 4.26%
15 year fixed, 0 point 3.36%  0.09 3.27%
5/1 ARM 3.37%  0.10 3.27%
 
View Rates in your area Search
Product Rate Change Last week
30K FICO-based HELOC 4.74%  0.01 4.75%
50K FICO-based HELOC 4.51%  0.01 4.50%
100K FICO-based HELOC 4.24% --0.00 4.24%
 
View Rates in your area Search
Product Rate Change Last week
60 month used car loan 2.86%  0.20 3.06%
48 month used car loan 2.79%  0.40 3.19%
60 month new car loan 2.94%  0.10 2.84%
 
View Rates in your area Search
Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.02%  0.01 1.03%
5 Year CD 1.59%  0.01 1.60%
 
View Rates in your area Search
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.01 15.70%
Cash Back Cards 16.36% --0.00 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Divorce carefully, or as Gwyneth Paltrow says, practice "conscious uncoupling."
advertisement
Partner Center
advertisement

Connect with us