The Value of Time

When recent retirees are asked whether they would have done anything differently about their retirement planning process, many say they wish they’d started sooner. The mistake that people at all income levels make with retirement accounts is not starting at a younger age.

Time is an important ally when saving and investing, because it allows you to recover from periodic bouts of market volatility. It took five and half years after the vertigo-inducing drop that deleted $11 trillion from stock portfolios for the Dow Jones Industrial Average to regain all of its losses and reach a new high. Those who did not panic and sell their stock investments in 2008–2009 have fully recovered.

Having time on your side makes it easier to accumulate money for retirement, because those who start early don’t have to set aside as much every month. Each decade you delay starting to save means you’ll have to approximately double your savings rate to meet your goal. For example, if socking away 5% per year starting in your early 20s will get you to your goal, waiting until your 30s may mean having to save 10%, and so on.

Time gives you the luxury to be able to develop a plan, and to adjust your savings strategy as you move through your first job, while building your career and preparing for the transition to retirement.

While you’re young, it’s fun to spend money and live in the moment. But, if this describes your philosophy of money, you should motivate yourself to start saving sooner. The longer you wait to save, the more you ultimately will need to save. By making small adjustments in your savings rate now, the easier it will be for you in the long run.

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Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; www.kmotion.com

© 2013 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.

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This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this educational material

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