How often do you think about saving for retirement? I am 28 years old and sometimes I feel like I think about saving up for retirement more often than the combined thoughts of 10 people my age. So often I hear my friends spouting that stupid YOLO (You Only Live Once) phrase while they buy up ridiculous toys and houses that they can’t really afford. They are so concerned with the stuff that they think they need that they will most likely have very little to show for their efforts when they retire. Nobody is talking about what they are doing now in order to fund their retirement, and here are the top 8 reasons why:
1) “I Don’t Have Enough Money”
There are truly some people out there that are down on their luck and are doing everything that they can just to survive, but the majority of the people that are complaining about money could easily save for their future if they would just reduce the quality of their lifestyle a little bit. Instead of living in a $250,000 house that is keeping them strapped for cash every month, they could be living in a $100,000 house and putting $500 away into their retirement fund 12 times a year.
People often feel like retirement is so far into the future that they just decide not to save for it until later. This is a huge mistake. The longer you wait to invest, the less it will work in your favor. Don’t be that person that waits until they’re 50 years old and then say, “Oh crap, I don’t have any money saved up.” The best time to start investing is now, no matter how old or young you are.
3) “Why Save? I Plan to Work Until I Die”
Some people absolutely love the work that they do, so they just assume that they will work until God takes them off this earth. While this sounds all well and good, that’s just not how it works half the time. More often than not, our body or our mind will not allow us to function as we once did, so we are forced to live in a retirement community or worse, a hospital. When this happens, bills pile up fast. Just a run of the mill retirement home can cost $70k a year. If you saved nothing, that burden will be on your children.
4) “I Want to Pay Off Debt First”
I am all about paying off debt, but you also need to invest to support your future. Just last year, I had $20,000 of debts to pay off, but I did not stop contributing to my 401(k). Over the course of the year, I was able to pay off that debt and contribute 6% of my paycheck to my retirement fund each year. Just in that one year, that fund has increased by $15,000. As you can tell, putting money into that 401(k) was entirely worth it. If you get a match from your company, do everything you can to put money into that retirement fund.
5) “There Is No Match From My Employer”
Ok, so you don’t get a match from your employer when you save for your retirement. So what? It’s not their responsibility to keep you alive financially. You should just be thankful to have a job that puts a roof over your head and food on the table. Even if you don’t get a match from your employer, you can earn quite a sizable amount of money over the years if you just stay consistent.
6) “I’m Scared I Will Lose Money”
Some people are absolutely terrified of the stock market because it has hurt them before. To be honest, I don’t really know what that feels like. I didn’t start investing until 2009 when the market was at its low. But, I know that if the market goes back down again, I will be investing aggressively because chances are that it will bounce right back like it has done in the past. Plus, I know that the alternative is even more scary. If I would just take my cash and stuff it under my mattress that it will be worth far less at retirement (due to inflation). Forty years from now, my $100 will likely be worth about $10. So if I was able to save $500,000 in my bank account, that would only be worth about $50,000 (in today’s money) during my retirement years, which would allow me to live for about 2 or 3 years. By not investing, your chance of losing is 100%.
7) “I Want to Help My Kids Get Through College”
It sounds admirable doesn’t it? Instead of putting money away for retirement, you will put that money toward your child’s education and give them a better future. Maybe you are, but I see two problems with that. First of all, you are not teaching them responsibility with this move and they will likely not take their education seriously. And second, when you reach your retirement years you will be expecting them to help you out financially, which doesn’t sound all that caring to me. Does that make any sense to you?
8 ) “The Stock Market Is About To Go Down”
When the market is going down, people tend to stop contributing to their 401(k), but this is actually the best time to invest! If the market was healthy today and I put in $100, I would probably buy 2 shares of stock. Let’s say a year from now the stock tumbles to half of its value. Suddenly, I am able to buy 4 shares of stock with the same amount of money. If those stock prices raise back up to their original value, then I will be a very rich man. Don’t get nervous when the market goes down. Stick to your guns and continue to invest.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.