Too Young to Think About Retirement? Think Again!

Her sister, April, has been just as diligent. “I started investing with an IRA because my company didn’t have a 401(k) at the time.” April invested about $10,000 into her Roth IRA over three years until her job set up a 401(k) plan in 2007. Through automatic payroll deductions she maxes out her contributions each year and has more than $66,000 in her 401(k), along with a 3% match from her employer, and $13,600 in her IRA.

Many people, start too late because they think they don’t make enough, but April says, “You can still put something away. Do the best you can. It’s better than putting nothing away. And the interest is going to compound over the years.”

She adds: “You can’t just live for today. Don’t put it off and say ‘I’m going to do it later,’ because time passes by quickly. The earlier you start investing, the better the position you’re going to be in in the future.”

INVEST, EVEN IN A DOWN ECONOMY
In the early 1980s, 401(k)s were just being introduced to the American workforce and Robert A. Jacobs, who was 30 at the time, was among the first group of workers to participate.

“I thought it was a great thing because one of the huge benefits of the 401(k) at the time is that the company contributed 6% to it, and that’s just free money,” says the Oakland, California, resident.

Prior to the introduction of a 401(k), he invested 10% of his pay into high-yield savings accounts. By age 30, he already had $30,000 in savings. Jacobs has accumulated close to $700,000 in his 401(k) and nearly $300,000 in mutual funds and about $20,000 in individual stocks.

Even after being laid off in 2008 after nearly 20 years with Oji Ilford USA, a photo supply manufacturer, and left unemployed for 14 months before starting his own consulting firm, Jacobs chose not to suspend his contributions. “One of the basic rules is that regardless of the situation you are in you should still try to save something; put something away from whatever income you get,” he says. Although less than he was saving while employed, he’s still committed to allocating 5% to his retirement savings.

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