The $25 A Week Master Plan To Retirement

My kids overheard a conversation I was having regarding saving for early retirement and were intrigued, not about retiring, but about having their money grow into  what for them seemed like an insane amount. Since their earning potential was limited to washing the neighbor’s car, or mowing a lawn, I tried to show them how easy it would be to start small.

A small amount is all that is needed, say $25 a week. I used the morning coffee their uncle buys every day as an example.  Coffee should be brewed at home; Easy math, $5 a day is $25 a week.

I also mentioned the lunch they buy at school every day.  They could brown bag it and save all that cash. They said that they saw my point but that my math was flawed as the ingredients had to be purchased. At least they saw my logic.

$25 a week is roughly $100 a month, $1,200 a year.  That may not seem like much, but I found an IRA calculator and plugged in the numbers. That money contributed from the ages of 19 to 65 could easily add up to more than $390,000.  Not a bad return on your investment that totaled only $55,200 spread out over 25 years.  

I had a captive audience. They wanted to know more. but a did not want to overwhelm them. The way things are right now who knows what the age of retirement will be for them.  Hopefully they didn’t ask just to amuse me.

Even if they can only start with $25 a month, that will get them going.  They will soon see it slowly creep up and stay motivated.  Eventually they will be able to increase the amount they save.

Two lessons for the future:

• The magic of compounding interest, the interest calculated on both the initial deposit and  on the previously accumulated interest.    

• Available tools to save for retirement.  There are many, and we should not rely on just one. They need to be explored.

These will be handed out in due time.  Love the light bulb moment, when it all clicks and you can literally hear the gears turning.   Have my work cut out for me.  Hopefully they learn from my mistakes and not their own, may be just wishful thinking on my part, but one can always dream.  They start early enough and get going on the right path and they will soon start working on what they love instead of working just to pay the bills.

Have you done anything to save for retirement? Remember, over time small savings add up.

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.