Cutting this expense can add a million dollars to your retirement account!

Saving for retirement can be a challenge if you’re living paycheck to paycheck.

According to a recent survey,[*] Americans aren’t doing a very good job saving for retirement. Forty-two percent of respondents have less than $10,000 saved, which is barely enough to live on for 3-6 months in retirement.

The way I see it, most Americans spend way too much money on non-essentials and not enough money on securing a sound retirement.

Allow me to share a real story from my first book, Whatever Happened to the Promised Land?:

Many years ago, I had a meeting with a young woman. She wanted to start saving for retirement but didn’t have any money to get started. She had access to her company’s 401(k) retirement plan, but she was not contributing to the plan, even though her company matched fifty cents on the dollar. What a shame! Free money is normally a good thing! The more I delved into her financial situation, I discovered she would stop at Starbucks for a café latte on her way to work each day. I wasn’t sure what that was, since I don’t drink coffee. I asked, “Why don’t you buy yourself a can of coffee, make your own coffee in the morning, and take the three bucks a day, you were spending at Starbucks, and put it in your 401(k)?” Remember―her company would add fifty cents to every dollar she contributed. That’s four and one-half dollars per day, times five days a week, times 52 weeks a year, which totals $1,125 per year. Invested at 12% (hypothetical investment return, just shy of the stock market average over the last 104 years), for 40 years (retiring at 65)― any idea what that will be worth? Just shy of one million dollars―$966,000 to be exact! She had no idea how expensive café latte really was.

So, when I hear people say, “I don’t have any money to invest,” generally, it’s a matter of priority, not a lack of finances. If you knew you could be a millionaire by giving up coffee, would you?

Next time you look at your 401(k) statement, ask yourself, “Am I doing everything I can in order to secure a comfortable retirement plan?”

Visit Greatinvestor.org to learn more about how money works.

Plans fail for the lack of counsel, but with many advisers they succeed.   Proverbs 15:22 (NIV)

Thanks, and Blessings!

Richard

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[*] Go Banking Rates.