Smart401k Blog

As I was waiting for my latte this morning, I began to wonder what it was worth to my retirement…..

• If you‘re 30 years old or younger it could be worth more than $60,000….
• For someone with at least 25 years until they will need the funds, it could be worth more than $25,000….
• And for someone with at least 15 years until they will need the funds, it could be worth almost $10,000….

You might be saying, “Wow, that’s a lot of money, but I just can’t alter my current budget?”

Well, you could start by drinking one less latte a week.  Increasing the amount you save in your 401(k) by $25 per month or less than $4.50 per week in take home pay (using a 30% combined tax rate) could help you build an additional nestegg for your retirement.

• For example, if you make $30,000 a year it would mean investing just 1% of you salary into your 401(k) plan. At $50,000 a year you would only need to defer slightly more than 0.5% of your annual salary.

What’s our point?  One of the most common statements people make is that they can’t save any more money or that increasing their deferral amount won’t be worthwhile.  Well, if you can skip one latte a week, you will be in a better place for your retirement.

Scott H

Methodology:  This example is for illustrative purposes only.  We used an investment schedule of $25/month, a tax-deferred account and an 8.5% annual return (this return does not represent the return of a particular investment option) to project the account balance

This entry was posted on Wednesday, May 7th, 2008 at 2:25 pm and is filed under Retirement Investing Education, Thoughts from Scott H. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.