Saving money isn’t as fun as spending it. So instead of focusing on how much you need to save, let’s frame the retirement savings choice in a different way — purchasing deeply discounted “retirement dollars” today that you will eventually need to spend in retirement.
The size of the discount gets larger for people who start early and earn higher investment returns. But assuming an 8% average yearly investment return, a person who starts at age 25 could be buying future retirement dollars for about 5 cents each.
At age 35, future retirement money can be bought today for 10 cents on the dollar.
At age 45, they can be purchased for 21 cents on the dollar, and so on.
So, if you are a 25-year-old being asked if you want to sign up for your company’s retirement plan, remember, they are offering you a sale!!!
If you are interested in what your “retirement sale” might look like, schedule a Get-To-Know-You meeting on the site!
This analysis by TCI Wealth Advisors, an AZ-based company, assumes the person earns 8% annually in a stock-focused fund and leaves the money alone until age 65.