Retirement investing: A little goes a long way | College Park ...

Scott Brown

Every year I attend an event for all the surveyors and surveying companies in the Central Florida area. All the companies get together to meet one another and see the latest products available for surveyors. I realize your first question is ?Why were you there?? Well, we handle the retirement plans for some of the surveying companies in Orlando, so we were supporting their event.

I was walking around among the booths marveling at all the gadgets. Most of the time I had no idea what I was looking at, but everyone around me tended to know (or at least seemed as if they knew) what they were talking about. One demo was showing some new equipment that allowed surveyors to drive by in a truck and get all the potential data about the site. This allowed the surveying crew to do the job faster and in a safer manner since they weren?t exposed to the traffic while standing on the side of the road. After about five minutes of watching this, one of the sales guys came up to me and asked, ?Do you do a lot of surveying?? I paused for a second and said, ?No, not at all.? I then told him what I did, that I do retirement planning. He responded with a comical statement, ?Well, if I sell enough of these I will give you a call.? We both laughed, and I went back to watching the demo.

I was thinking about that statement on the way home, ?If I sell enough of these I will give you a call.? Now, I realize this was a joke from this guy, but too many people feel that way about retirement planning. I?ve heard, ?When I can save $100 a month I?ll start saving. I can only afford to save $50 right now, and that won?t really make a big difference, right?? Actually, the little amounts add up. The smaller amounts with an earlier start have a bigger impact than most people can imagine. Let?s look at some math.

We have two people who want to have $1 million at age 65. If they both earn 9%, how much will each of them have to save each month if one is 25 and the other is 45? Go ahead, I?ll give you a minute ?

Well, of course the 45-year-old will have to save more because he doesn?t have as much time to benefit from growth, and he is approaching age 65 much sooner than the 25-year-old. You would think since the 45-year-old only has 20 years (instead of 40 years like the 25-year-old) he would have to save twice or maybe three times the amount of his younger counterpart. Would you believe that the 45-year-old would have to save seven times the amount of the 25-year-old to reach the same goal? It?s true. The 45-year-old actually has to save over 700% more per month than the 25-year-old to reach the million-dollar mark at age 65. The 25-year-old will have $1 million in this example at age 65 by putting away $213.61 per month. The 45-year-old will have to put away $1,497.26 per month to reach the same goal of $1 million. It?s pretty crazy when you think about it.

Obviously, we all have different goals and saving habits, but it is true: the earlier and sooner you start the better. It?s easy to be the guy who says, ?I?ll give you a call if I sell enough of these,? because human nature is to think things are going to get easier and better. What if the time never comes when you can save your ideal amount per month? Getting started now with any amount you can save could reap long-term benefits with greater rewards than you ever thought possible.

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Source: http://community-paper.com/2013/02/26/retirement-investing-a-little-goes-a-long-way/?utm_source=rss&utm_medium=rss&utm_campaign=retirement-investing-a-little-goes-a-long-way

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