I'm 34. I grew up poor but I've always had a goal of retiring one day. Not a super special retirement, just a retirement that wasn't full of financial worries (though, I guess that is a special retirement these days).
Anyway, I started saving for retirement at 25. My job offers a simple IRA with an employer match of 50% of my contribution up to 3% of my salary. I started at 6% to get the full employer match. It took a few years of slowly increasing my contribution up to the maximum simple IRA limit but I've been hitting the maximum for a few years now. I've gotten a raise every year and the first thing I did each year was increase my IRA contribution so I've never really felt the sting of paying the increase - if my pay went up $3,000 and my contribution went up $1,000, it was like receiving a $2,000 raise. It really did make the retirement contributions easy to live with and help prevent lifestyle creep.
I'm in a Vanguard Target 2045 retirement fund. So far, me and my employer have contributed $139,374.90, which is crazy when I think about it. My investment returns are $55,094.60 for a total of $194,469.50. Over $55,000 in returns! That was 1 year's salary when I started this job! My retirement was actually ~$210,000 just a few months ago before the market tanked but since it should recover by 2045, I'm not sweating this downturn. This is probably a buying opportunity since I won't need the money for 30 years.
The real reason I posted is because Vanguard reinvests a dividend, LT gain and ST gain at the end of each year. At the end of 2018, Vanguard gave me $4,537.74! Let's say it goes up to $5,000 and never increases again which is unlikely to stay that low given my increasing balance... Vanguard will have given me $150,000 over the next 30 years plus any money I make on those payments.
So at this point, I'm maxing out my simple IRA contribution without feeling it because I never had the money in my hands in the first place, work is giving me 3% of my salary (which is climbing nicely now at this stage of career) and Vanguard is giving me pretty big year end contributions.
It's hard to see how it's all going to work out when you start, especially when there's nobody in your life making these choices. But now that it's been almost a decade, it's so obvious to me. It really does work.
Please do what you can to start saving for retirement despite how daunting it may seem because it really does come together later on.
Submitted January 08, 2019 at 09:52AM by LikeMyNewHat http://bit.ly/2ADeYoP
