The Future Is Now! Start Funding That Retirement Plan Today!

When you’re just starting your career, it may be hard to think about planning for retirement, especially when it’s so far off in the future! Whether you’re already earning more than six figures or living paycheck to paycheck, it’s important to get your financial house in order. You can start by saving as much money as you can comfortably set aside each month for a retirement plan.

“It doesn’t matter how much you save, but start early,” advises ASCP Chief Financial Officer Bobby Lendi. “The compounding nature of interest is absolutely amazing in that your money will double far more rapidly.”  

The chart below highlights this point.  Assuming an average return of 7%, to achieve $1,000,000 by age 65, the monthly required savings amount is drastically lower the sooner you start.

Age to Begin Saving	Investment Return	Portfolio Value at 65	Monthly Savings Necessary
25	7%	$1,000,000	$380.98
30	7%	$1,000,000	$555.24
35	7%	$1,000,000	$819.70
40	7%	$1,000,000	$1,234.47
45	7%	$1,000,000	$1,919.67
50	7%	$1,000,000	$3,154.96

Once you’ve taken that step, your next decision is to figure out whether you want to invest in an individual retirement account (IRA), a Roth IRA, or your company’s sponsored retirement plan, such as a 401(k) or 403(b). Lendi says this is a no-brainer. Invest in your employer’s sponsored retirement plan. Oftentimes, employers match their employees’ contributions to these plans.

“These sponsored plans are easy because they’re already set up, and there is a list of defined investments to choose from that have been pre-vetted,” Lendi says. “If your company does offer an employee match, it’s an added bonus that will help grow your investment accounts even faster; every time you put in a dollar, it immediately doubles via the match.”

Try to contribute up to your company’s match. If you can’t match that limit, contribute as much as you can. Then, look for other opportunities to increase your long-term savings, such as taking an annual pay increase and putting that amount toward your retirement program. 

Another important consideration at the onset of one’s retirement planning is choosing which fund or funds to invest in within the retirement plan. While each company’s plan is different, they usually offer an array of different investments from which to choose. From stocks and bonds to simple money market savings accounts, the options can be overwhelming. 

Lendi believes the choice can be very simple. “Early in your career, the best choices are low-cost stock index funds. Every investment choice in the plan will have what’s called an ‘expense ratio.’ That’s the fee the fund charges you to invest your money there. It’s stated as a percentage, and you’ll be charged that percentage of your balance annually to be invested in that fund.”

“Some funds, such as target date retirement funds, have high fees. Low cost index funds—which come in a variety of named funds like ‘Total US Index,’ ‘Total Stock Market’ or ‘S&P 500 Index’—will give you full exposure and diversification to the market at a cost that’s usually under one tenth of one percent.”

Lastly, if all of this is still too daunting, most plans offer at least some limited financial advising services at no charge. 

“An advisor will help you verbalize your financial objectives and your aversion to risk,” Lendi said. “And then, he or she will help you position your investing in the best way to complement those two.”

In conclusion, no matter where you are in your career, setting yourself up with a retirement strategy is better done now than later. The benefits of aggressively saving now are exponential. At the end of the day, you’re not investing in a stock or a retirement plan: You’re investing in future you…and future you is most definitely worth the investment!