{"id":7192,"date":"2013-11-25T07:12:58","date_gmt":"2013-11-25T15:12:58","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7192"},"modified":"2016-12-21T07:28:18","modified_gmt":"2016-12-21T15:28:18","slug":"how-to-retire-on-time-worries","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/how-to-retire-on-time-worries\/","title":{"rendered":"How To Retire On Time With No Worries"},"content":{"rendered":"

Frankly speaking, the biggest advantage of any single investor is time. How big an advantage? Big enough to allow an ordinary saver to retire well with no worries.<\/p>\n

That\u2019s not what happens, of course. Most people do it completely backwards, waiting until their 40s to start thinking about how to retire on time<\/a>. Let\u2019s look at two scenarios that illustrate the very different outcomes of investing early and late.<\/p>\n

\"how<\/a><\/p>\n

The first scenario you probably know well enough. Our late saver has worked hard for decades and has some money in the bank, perhaps $50,000 in money market accounts. It\u2019s rainy day money, for sure, within easy reach if need be.<\/p>\n

That\u2019s an admirable safety blanket, but it\u2019s not a\u00a0retirement plan<\/a>. If our late saver takes that $50,000 into the market, it only has about 15 years to grow.<\/p>\n

What happens next? Prudently invested, one could expect the money to double in about 10 years. Now it\u2019s $100,000. It\u2019s not enough to retire on, so the late saver puts off retirement to 70. Given another full 10 years, the money doubles again to $200,000.<\/p>\n

Now let\u2019s consider an early saver. It\u2019s unlikely that our younger saver starts off with $50,000 but for argument\u2019s sake imagine that\u2019s the case.<\/p>\n

Money still doubles every 10 years. But more time means more of the\u00a0magnifying effect of compounding<\/a>. From age 20 to 30, the money turns into $100,000. By age 40, its $200,000. When our saver is 50 the pot is up to $400,000.<\/p>\n

By 60 the number is $800,000 and if he or she holds off until 70 it\u2019s $1.6 million.<\/p>\n

The early saver hasn\u2019t done anything different or tricky. He or she just started earlier. How can you apply the power of compounding to your own\u00a0retirement savings<\/a>\u00a0strategy?<\/p>\n

1. Start early<\/strong><\/p>\n

In the example, our young saver starts off with a lot. But you can replicate the effect by starting off with a little and adding to it, paycheck by paycheck, over decades. Just remember: Every dollar you put away turns into $2, then that turns into $4 and so on.<\/p>\n

2. Be consistent<\/strong><\/p>\n

Saving is a discipline but, unlike exercise, it\u2019s one you can set on automatic pilot. In fact, you should. Saving the maximum allowable in your company 401(k) or\u00a0IRA plan<\/a>\u00a0using automatic deductions gets money out of your hands before it appears in your pay. Set it and forget it.<\/p>\n

3. Avoid temptation<\/strong><\/p>\n

It\u2019s purposefully difficult to pull money out of a retirement plan. There are penalties and taxes that make doing so extremely unattractive. Likewise, fight the urge to reduce your contributions. Rather, increase them over time to the maximum, if you\u2019re not already there.<\/p>\n

Slow and steady wins this race every time, along with prudent investing using\u00a0proven portfolio tools<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Frankly speaking, the biggest advantage of any single investor is time. How big an advantage? Big enough to allow an ordinary saver to retire well with no worries. That\u2019s not … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":7194,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[18],"tags":[],"yoast_head":"\nHow To Retire On Time With No Worries | MarketRiders<\/title>\n<meta name=\"description\" content=\"Most people do it completely backwards, waiting until their 40s to start thinking about how to retire on time.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/how-to-retire-on-time-worries\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"How To Retire On Time With No Worries | MarketRiders\" \/>\n<meta name=\"twitter:description\" content=\"Most people do it completely backwards, waiting until their 40s to 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