This Is the Best Retirement Planning Move I Ever Made

NWRatCon · Aug 27, 2024

This Is the Best Retirement Planning Move I Ever Made (Motley Fool - free)

This Is the Best Retirement Planning Move I Ever Made | The Motley Fool

I did this over a decade ago, and it proves even more valuable every day.

www.fool.com

"I did this over a decade ago, and it proves even more valuable every day.

Saving for retirement involves a series of choices. You must decide which retirement accounts to use and how much to contribute monthly. You need to choose a Social Security claiming age and determine how much you can safely withdraw per month in retirement. You also have to decide how to invest your money and figure out when you can afford to retire.

There are a lot of moving parts, and they all contribute to the whole. This can make it difficult to pinpoint which decisions affect your nest egg the most. But in my case, I know there's one thing in particular I did that has gone a long way toward improving my retirement readiness.
....
I opened a Roth IRA when I was just 20 years old. Those first few years, I was unable to contribute all that much. There were even times when I couldn't contribute anything because my salary wasn't that high and I had other financial goals to save for. But every time I had the chance, I stashed a little bit of money away for the future.

In total, my contributions throughout my early 20s probably amounted to only a few thousand dollars. At that time, it was only enough to cover a couple of months of living expenses, tops. But that was then.
....
A $5,000 sum invested for 40 years and earning an 8% average annual return during that time will be worth over $108,000 when it's all said and done. Most people could live off this for a few years when paired with Social Security.

My later retirement contributions will also increase in value, but they probably won't be worth as much as those few early contributions simply because they won't be invested for as long. I rank those first Roth IRA contributions I made as one of the smartest retirement planning moves I've ever made."
________

This Is the advice I give to everyone starting out, no matter their financial circumstances. I even funded my children's first IRA contributions as soon as they earned enough to cover them. One of the best things you can do for your children's futures, hands-down.

mrjurrs · Aug 27, 2024

NWRatCon said:
This Is the Best Retirement Planning Move I Ever Made (Motley Fool - free)

This Is the Best Retirement Planning Move I Ever Made | The Motley Fool

I did this over a decade ago, and it proves even more valuable every day.

www.fool.com

"I did this over a decade ago, and it proves even more valuable every day.

Saving for retirement involves a series of choices. You must decide which retirement accounts to use and how much to contribute monthly. You need to choose a Social Security claiming age and determine how much you can safely withdraw per month in retirement. You also have to decide how to invest your money and figure out when you can afford to retire.

There are a lot of moving parts, and they all contribute to the whole. This can make it difficult to pinpoint which decisions affect your nest egg the most. But in my case, I know there's one thing in particular I did that has gone a long way toward improving my retirement readiness.
....
I opened a Roth IRA when I was just 20 years old. Those first few years, I was unable to contribute all that much. There were even times when I couldn't contribute anything because my salary wasn't that high and I had other financial goals to save for. But every time I had the chance, I stashed a little bit of money away for the future.

In total, my contributions throughout my early 20s probably amounted to only a few thousand dollars. At that time, it was only enough to cover a couple of months of living expenses, tops. But that was then.
....
A $5,000 sum invested for 40 years and earning an 8% average annual return during that time will be worth over $108,000 when it's all said and done. Most people could live off this for a few years when paired with Social Security.

My later retirement contributions will also increase in value, but they probably won't be worth as much as those few early contributions simply because they won't be invested for as long. I rank those first Roth IRA contributions I made as one of the smartest retirement planning moves I've ever made."
________

This Is the advice I give to everyone starting out, no matter their financial circumstances. I even funded my children's first IRA contributions as soon as they earned enough to cover them. One of the best things you can do for your children's futures, hands-down.

Time is the magic ingredient to investing for the future. This image saays it all.

Ben

Starts investing at age 21
Invests $2,400 every year
Stops contributing money at age 30
Total amount contributed: $21,600

Joey

Starts investing at age 30
Invests $2,400 every year
Contributes money until age 67 (a total of 37 years!)
Total amount contributed: $88,800

At age 67, Ben’s investment has grown to over $2.1 million, and Joey’s has grown to more than $1.2 million! Nine years made a difference of close to $1 million.

How Does Compound Interest Work?

If you use it right, compound interest will help you build wealth and chase down your dreams. Here's how it works.

www.ramseysolutions.com

Allan · Aug 27, 2024

NWRatCon said:
This Is the Best Retirement Planning Move I Ever Made (Motley Fool - free)

This Is the Best Retirement Planning Move I Ever Made | The Motley Fool

I did this over a decade ago, and it proves even more valuable every day.

www.fool.com

"I did this over a decade ago, and it proves even more valuable every day.

Saving for retirement involves a series of choices. You must decide which retirement accounts to use and how much to contribute monthly. You need to choose a Social Security claiming age and determine how much you can safely withdraw per month in retirement. You also have to decide how to invest your money and figure out when you can afford to retire.

There are a lot of moving parts, and they all contribute to the whole. This can make it difficult to pinpoint which decisions affect your nest egg the most. But in my case, I know there's one thing in particular I did that has gone a long way toward improving my retirement readiness.
....
I opened a Roth IRA when I was just 20 years old. Those first few years, I was unable to contribute all that much. There were even times when I couldn't contribute anything because my salary wasn't that high and I had other financial goals to save for. But every time I had the chance, I stashed a little bit of money away for the future.

In total, my contributions throughout my early 20s probably amounted to only a few thousand dollars. At that time, it was only enough to cover a couple of months of living expenses, tops. But that was then.
....
A $5,000 sum invested for 40 years and earning an 8% average annual return during that time will be worth over $108,000 when it's all said and done. Most people could live off this for a few years when paired with Social Security.

My later retirement contributions will also increase in value, but they probably won't be worth as much as those few early contributions simply because they won't be invested for as long. I rank those first Roth IRA contributions I made as one of the smartest retirement planning moves I've ever made."
________

This Is the advice I give to everyone starting out, no matter their financial circumstances. I even funded my children's first IRA contributions as soon as they earned enough to cover them. One of the best things you can do for your children's futures, hands-down.

Someone asked Warren Buffet once when was the best time to invest in the market. His answer was "now".

Stealers Wheel · Aug 27, 2024

Here's my plan: As soon as recreational marijuana is legalized nationwide, I intend to invest every dime I can in Frito-Lay!

cpwill · Aug 27, 2024

mrjurrs said:
Time is the magic ingredient to investing for the future. This image saays it all.
View attachment 67528992

Ben

Starts investing at age 21

Invests $2,400 every year

Stops contributing money at age 30

Total amount contributed: $21,600

Joey

Starts investing at age 30

Invests $2,400 every year

Contributes money until age 67 (a total of 37 years!)

Total amount contributed: $88,800

At age 67, Ben’s investment has grown to over $2.1 million, and Joey’s has grown to more than $1.2 million! Nine years made a difference of close to $1 million.

How Does Compound Interest Work?

If you use it right, compound interest will help you build wealth and chase down your dreams. Here's how it works.

www.ramseysolutions.com

I use that exact example when I teach high schoolers

mrjurrs · Aug 27, 2024

cpwill said:
I use that exact example when I teach high schoolers

Me too.
I also add in a youtube that is titled something like 'How I turned my crappy summer job into $162,000' or something like that.

cpwill · Aug 27, 2024

mrjurrs said:
Me too.
I also add in a youtube that is titled something like 'How I turned my crappy summer job into $162,000' or something like that.

Think I found it. Thanks for the tip

Do you teach in a school setting, or outside of it?

mrjurrs · Aug 27, 2024

cpwill said:
Think I found it. Thanks for the tip

Do you teach in a school setting, or outside of it?

Public HS

cpwill · Aug 27, 2024

mrjurrs said:
Public HS

How tied are you to the curriculum they provide? My students tend to find the videos kind of cringe, and I've ended up adapting a lot of the material to cover down on things like how to apply for a job, etc.

mrjurrs · Aug 27, 2024

cpwill said:
How tied are you to the curriculum they provide? My students tend to find the videos kind of cringe, and I've ended up adapting a lot of the material to cover down on things like how to apply for a job, etc.

The videos are definitely cringy, but serve as support for what I tell them. We just got new Econ textbooks and they are worse than the ones they replaced. CA just passed a Financial literacy law so I hope we will do more to meet the kids where they are.

I feel that Econ is a critical course for HS students, but the way our curriculum is set, it is really just an intro to college level micro or macro. I base a lot of my instruction on the vocabulary of economics. At least that way there will be a rudimentary understanding at the start of their next economic course (or they may understand what a news report is about). I do a lot of personal finance work in the class (partially because the seniors who take it are involved in their capstone project during Spring) and it allows me to keep their assignments more inside the classroom.

This Is the Best Retirement Planning Move I Ever Made

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