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How to Kick-Start Your Retirement Savings

How to Kick-Start Your Retirement Savings

March 31, 2020

I was not always the financial professional you see before you. In fact, there was a time when I didn’t know a retirement plan from a checking account. I was not raised in a home where money was discussed, which made the options that were available to me at my first job beyond confusing. So, if you’re entering the workforce for the first time, I understand how

In my case, I had a former boss who, when I was 25 years old, marched me over to the retirement plan representative at the food services company where I was employed and strongly encouraged me to put $50 per paycheck away for retirement. Up until that point, my only experience with retirement planning had been watching my parents not save for retirement, which meant that they worked until they physically couldn’t.

But for a young woman starting out in the workforce, watching the dollars accumulate was incredibly empowering. Even though I had student loans to pay and I had to work two jobs, the power of saving and the impact of compound interest fascinated me.

Here’s how it worked.

  • I invested $50 twenty-six times per year (biweekly) starting at the age of 25.
  • After 40 years at 6% growth I had $216K!
  • And, when you factor in the power of pre-tax deposits, $50 only “feels” like $37. (Since the payroll deduction is calculated prior to the Federal and State Income Tax Deduction, you are lowering your income taxes as well as investing in your future!)

Powerful combination!

This is what I suggest.

Anyone who has been to a new employee orientation knows how overwhelming it can be; they’re usually throwing information at you faster than you can digest it. Here are a few things you should listen for and/or ask questions about:

  • Which payroll deduction retirement and investment plans are available to you?
  • Is there a waiting period for you to be able to join?
  • Who is the representative you can contact about employee benefits?

Now, I realize that most people who start a new job procrastinate a little before diving into investing – and that’s okay. Give yourself three months to settle into your new job to make sure it’s right for you. After that, start saving using a payroll deduction to fund your 401(k), 403(b), 475…or whatever the company is offering.

And don’t get overwhelmed! Talk to coworkers and the company representative. Find a financial advisor who can go over what is offered to you.

I know it can be tempting to skip investing.

Yes, I know you’re saying that you can’t afford to take this money out right now, but I encourage you to be honest with yourself. If you regularly find yourself in the Starbucks drive-thru or signing up for the latest streaming service, your future self might not thank you.

I know for a fact that investing in yourself as early as possible can literally change your lifestyle. I am now witnessing clients I’ve helped throughout the years retire and fulfill their dreams of traveling, spending time with their grandkids, volunteering for things they’re passionate about…all because they took that first step.

And I will forever be grateful to that first boss I had who took me down to that retirement representative’s office and started me on this path. Not only did that moment start my journey toward financial freedom, it fueled a passion in me to help others do the same.

“Be careful how you spend your time and money, as you are exchanging a day of your life for it.”

Debbie Charpentier has been serving clients since 1989 by using a holistic, comprehensive approach that helps clients create the life they value and the legacy they envision. Charpentier Wealth Strategies is a Bakersfield, CA Financial Planning practice that offers fee-based financial planning services. To contact Debbie, email CRN2861667-120619