My Financial Wake Up Call....It Is Never Too Late

One day at work, some of us were discussing our upcoming family vacation plans. A comment from one of my co-workers intrigued me; not where they were going, but how he was paying for it. His tax-refund would pay for most of their trip.  I am not a fan of the tax-refund, and would rather avoid getting one if at all possible.

They were not going around the world but airfare, a nice hotel stay a plenty of meal-money were included.  I wondered how he managed to pull it off, and cornered him into telling me how he pulled it off.  He went on to tell me about the "new" saving for retirement tool he found at work, the 401K.  He meant new to him as he started contributing early that year.

His tax burden the previous years had always been huge.  The reason for his large refund was that he never adjusted the withholding  while his taxable income dropped.

These tax benefits were designed to incentivize and encourage us to save for retirement. You will have to pay taxes eventually, but not until you retire. The withdrawals will be considered ordinary income and be taxed as such.  The tax I contributed only enough to get the company match and nothing more.  All that money, the potential earnings...lost.  I made the necessary adjustments.  The IRS has capped the contributions at $18,500.  If you are 50 or older, that number jumps to $24,500.  This total does not include any company match that may be given.  These are capped as well. 

For most of us $18,500 a year is unrealistic, don't get discouraged because small savings over time add up.  Take a look at what you can end up with by saving little more than three dollars a day by reading  Your Pennies Do Count.

Imagine how much larger your nest egg will be if you increase your contributions with every raise or promotion you obtain.  Goes without saying increase your contributions whenever possible!

Do not forget about the company match, free money take it.

Your employer does not offer a retirement plan?  set up your retirement plan in the form of an IRA.  There are many available. Search them out yourself; they are out there.  Find the one that is right for you.  Most require an initial investment, minimum balances, and/or periodic re investments, but can be easily created.  Do not have much to start, you can open up an account.

I chose to invest in a low-cost index fund and took a “buy it and forget it” approach, at least for now.  I will not be using that money in the short-term and will leave it there until my retirement.  No fear, I will leave it there to ride the ups and downs of the stock market.

Many people do not see the advantages that retirement funds present both now and in the future. Hopefully you just did. Don’t delay, get started today. Your future self will be eternally grateful.



The views here expressed are all my own and are not legal, professional or financial advice. Consult a professional before investing. Referral links may be found throughout. I only recommend products I believe in.  This site presents links to other sites but is not responsible for their content or privacy practices..