Aug 31 2008

Where’s the Silver Spoon?

”Wealth after all is a relative thing since he that has little and wants less is richer than he that has much and wants more.” – Charles C. Colton


I have considered variations of this quote over the years and believe there is much truth in what it says.   Those of us that constantly strive for more and better will never be satisfied for very long and so it is probably a very good idea to find some other interests or projects in life.  If we can somehow convince ourselves that it is OK to settle for what we already have once in a while we might also realize there is more to life than money and material possessions…but then some of us never will!


On a related, but slightly different subject, I am about twenty years out from the traditional retirement age and at this point in my career, I am working to accumulate enough capital so that when I approach retirement age, I won’t be under a great deal of pressure to earn more money by working.  This is not to say that I want to stop working altogether, just that I don’t want to be a slave to the grind in my seventies.  There are certainly times when I would like to spend more of what I earn on new toys and extravagant vacations, but my retirement-age goal is simply more important. 


In order to reach this goal, I am doing what you would probably expect.  I max my contributions in my company’s 401(k) plan and I save what I can of my post-tax earnings.  I realize this is nothing revolutionary but it simply amazes me how many people do not take advantage of tax-sheltered savings plans.  I suspect many of those I am referring to imagine they will one day magically (or by inheritance) come into enough money to retire in comfort.  Others just never get their finances in order and falsely believe there will be time once the kids are out of college.


So times are tough and you don’t have enough money to pay your bills – let alone set any aside for retirement.  I know this is a legitimate problem for many right now and I also realize that some of you are strapped with adjustable rate mortgages that have turned your world upside down.  Please get some help because you truly need to get things under control and begin to put money away for the future…or you will likely never get out of the trap you are presently in.


Regardless of whether you are just starting your career or you have been working for years but spending everything you earn, start contributing at least 5% of your pre-tax salary to your company’s plan.  If your company does not offer a savings plan, then you should talk to an accountant or financial advisor and learn how to take advantage of an IRA in a similar fashion.  The toughest part is just getting started.  Next year, up your contribution to 6% and then 7% the following year – you get the idea!  In a future post, I will make some suggestions on how to allocate your contributions, but for now just get started – if you haven’t already!


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