Our finances play a huge role in our lives. It has an effect on how long we work and what types of positions we seek out. As a result, I sought out the expertise of Alan Adducci. This will benefit people at all stages of their career or background.
Why are those just starting their careers, hesitant to start investing, for retirement?
I find that many people do not have information they need to make those decisions. We may not learn this is school. And if you not learn it from your family, you have seek out the information.
The effect of compounding returns has the most dramatic effect, the earlier you start investing. And the younger you start investment, the more this will work for you!
For example, consider an example, two twin brothers, Sam and Ben, both age 23 and both starting their career, both earning same salary, $50,000, with the same annual raises, 3.72%, and investing in the same investment averaging a hypothetical 8% per year increase.
Sam starts investing his first check, saving 5% of his salary, into his 401(k) Plan, with the company contributing a match of another 3%.
Fast forward to age 68, Sam accumulated, $2,674,696.
Ben was not sure what to do, he had other bills, priorities, etc., and waited 10 years later to start investing, then diligently saved the same % amount, with same match amount, until he was also 68.
Ben will have $1,612,983 in his 401(k) at age 68.
So those lost first 10 years, of investing, or a total of $29,628 of his contribution not invested, during those first 10 years, cost Ben $761,713 in potential future savings. Ben will have 72% of the balance he could have accumulated, if he started from his first day working.
COMPOUND GAINS - when the gain you make on your investment, gets compounded by MORE gain, the results can be dramatic. However, this takes years to happen, and the longer you invest, the better this works.
But in real life, the effect gets magnified even more. Those who save early, like Sam, develop the saving habit, and it feels great! They see their saving grow. They may be more likely to live within their earnings. They may be more likely to arrange their life style, in the future, to allow investing a big portion of their raises, and bonuses, resulting in the potential for increased savings.
Those like Ben, who wait, may never learn this, and just the opposite may likely happen. They may likely live paycheck to paycheck, their entire life, always living slightly over their income and never experience financial confidence
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
When is an appropriate time for a working professional to start investing for retirement?
As early as possible!
Often someone working also is building an emergency fund, or paying off student loans, etc. So even if they cannot save as much as they would like at the beginning, starting early, with the inner commitment to increase the saving annually, is prudent for most employees.
Is it ever too late to start investing, for retirement?
It is never too late to start!
Very important to determine what you have learned from the past.
I have seen individuals and couples make dramatic changes in a short time period!
It is important to accept any errors made in the past, as a learning experience for the future, and concentrate on only those things you can control.
The Financial Plans we create with clients, first uncovers all their goals and concerns. Then lays out the steps, to move toward them. This Written Financial Plan, usually contains many areas, helps to focus clients on all that they can control, on lessons learned, and their future goals!
The opinions voiced in the material are for general information only and are not intended to provide advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Examples presented in the material are meant for illustrative and or informational purposes only, and not indicative of any specific investment product. Individual circumstances will vary.
Tell us about your company and how to contact you?
ADDUCCI FINANCIAL, LLC is an independent financial services firm located in Naperville, Illinois. I guide business owners in all areas of financial management. This includes tax-efficient wealth accumulation, Analysis and Benchmarking of current Company Sponsored Retirement Plans, Customization of Company Sponsored Retirement Plans, retirement planning, estate and gift planning and business exit strategies.
ADDUCCI FINANCIAL, LLC
1717 N Naper Blvd
Naperville, IL 60563-8838
© Copyright 2014. Adducci Financial, LLC
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.
Securities licensed in the following states: CA, FL, IA, IL, IN, KY, MI, MN, MO, NC, NE, OH, WI
Insurance licensed in the following states: IL, FL
Until next time, Own Your Legacy...
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