Author: Paul A. Carl, CHSA, CPFA^™Vice President, Retirement Plan Consulting, Registered Representative

This week I digress from the previous Retirement Meditation cadence. Why? My fourth (of five children) graduated from college last week. In watching the ceremonies, my mind drifted: How many new college graduates are thinking about retirement? Or, at the very least, saving for retirement?

I have already addressed this week’s Retirement Meditation question with the oldest three. My response: “Years ago. Start now if you haven’t already.” I’m anticipating this same question from the newest college graduate once he’s settled in his new hometown (Tampa, Florida).
Getting an early start saving for retirement allows individuals to save methodically, over a long period of time, with the incredible effect of compounding investment returns. The anxiety of short-term investment markets becomes muted because long-term, historically, most investment returns have outpaced inflation. 

Employee education in the 1990’s through today has focused on retirement savings accumulation. Examples abound of the 25-year-old who saves immediately and the colleague who delays saving for 5- to 10-years or longer. In each illustration, the person starting earliest has a higher account balance at age 65 than the colleague who delays saving. In fact, some of the illustrations go so far as to have the early saver stop saving for retirement after 20-years. Even in these illustrations, the early saver – thanks to the investment compounding effect – has a higher account balance than the delayed saver. Granted, these are hypothetical illustrations and results will vary. Regardless, here are some solid guidelines for successful retirement savings:

• Defer into your organization’s retirement plan as soon as you’re eligible.
• If your organization offers a matching contribution, ensure that you are capturing all of that employer match.
• If you are covered by a high-deductible health plan, save into the health savings account (HSA).
• Do your best to not touch any of these funds you are saving. They carry incredible tax benefits.
• Invest smartly. Remember, if you’re willing to celebrate a +30% annualized return, you are also indicating that you can accept a negative 30% annualized return. Investment returns are based on risk. The higher the risk, the greater the potential for incredible investment gains…and losses.
• Let time be your friend. 
• Even if some or much of your youth has slipped away, still save. You’ll be delighted with anything you have saved for your future.

When did you start saving for retirement?

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