The cost of not investing

Allow me to introduce you to two wonderful (imaginary, but very realistic…) women.

Deborah is super kind. Loves her kids and her dog, Fifi. She has a job as a teacher making $40,000 per year. Deborah doesn’t invest, she just lives below her means. She doesn’t take on debt, but she also doesn’t set anything aside for retirement. Deborah’s big problem? She is going to end up with whatever the government will give her through social security 30 years from now. 😨😱

Samantha is an equally loving person. She’s a part-time nurse and saved four people’s lives last year even during the pandemic (again, all made up, but still…realistic). Sam (only her closest friends get to call her that) decides to invest 8% of her money each year for retirement. During her 20’s she is paying off student loans, so she doesn’t get started investing until she is 33 years old. She gets a 3% raise each year and increases her investment to match what’s happening to her salary. Year 1 she invests $3200, year 2 invests $3,296, and so forth. Samantha just checks her investments ~once per year to see how they are doing but doesn’t have to think about it for more than about 20 minutes. With just this simple plan, when Samantha gets to retirement, she’ll have $647,142 in the bank! If she uses a Roth IRA, most of that money will be available tax-free.

Be like Samantha.

Come up with your target retirement amount, automate it, and let your wealth build up over time.