Not putting money in retirement accounts is a big mistake
Get in the game
Pretax retirement plans are where all wealth starts. Yet, according to surveys by PlanSponsor.com, many American workers who are eligible for retirement accounts hasn’t even bothered to sign up. When it comes to assuring their futures, these people are not even in the game. They are watching from the sidelines. If you are one of them, consider today your sign-up day.
The single biggest investment mistake you can make is not putting money in retirement accounts
The single most important investment decision you ever make may well be how much to automatically Pay Yourself First into your retirement account. Other than buying a home, this one decision can do more than any other action you may take in your life to determine whether or not you will become rich.
With this in mind, it shouldn’t be hard to figure out the single biggest investment mistake you can make: not using your plan and not maxing it out.
People who are not serious about being rich say these things
- I can’t afford to save more than 4% of my income
- My spouse is enrolled in his/her plan, so I don’t need to enroll in mine
- Our plan isn’t any good, so it’s not worth using
- My company doesn’t match retirement contributions, so signing up for the plan is not worth it
- Investing in stocks is foolish
- I will save more later
Serious wealth builders say these things
- No matter what, I will Pay Myself First
- I will Pay Myself First at least 10% of my income and strive to contribute the maximum amount I am allowed to my retirement account.
- I will make sure my spouse is doing the same.
- I understand that when the stock market goes down, it allows me to buy stocks at bargain prices… and that is a good thing.
- I know the time to save for tommorrow is always today.
Someday will never come
Some people will think that they will start saving for retirement sometime down the road… when things get easier.
When people are in their 50s, if they get downsized, people who have money in their retirement accounts will not see too many troubles because they are ready to retire anyway and they know they had saved enough to be able to do it comfortably. People who maximize their contributions could have about $900K in their retirement accounts.
People who never does get around to increasing their percentage contributions have a very small amount of money. Their lives will not be nearly as comfortable as those of others who have money in their retirement accounts.
Automation plus Compound interest equals serious wealth
Over time, money compounds. Over a lot of time, money compounds dramatically.
So, make the process of putting money in the retirement accounts automatic. And let it compound.