Squirreling Away Savings

Squirrels have it figured out. This time of year, they are scurrying around the woods behind our house collecting nuts and SAVING them for the future. Winter in Minnesota – where we live – is long and only the good savers will make it through.

The same is true for retirement savers. The ones that save diligently will enjoy a financially worry-free retirement. It is troubling to see articles like this one that say only 20% of American workers max out their 401k plan each year. That’s 28% among boomers, 18% among millennials, and a paltry 16% among gen X. The numbers aren’t much different for IRAs.

I often say that “a dollar saved, takes you a surprising THREE steps toward financial independence”.

Why is that? Here’s how I count the three ways: First, a dollar saved is a dollar you can spend tomorrow; second, it is a dollar that will grow and give you more dollars in the future; and third, by not spending on things you don’t really need, you keep your lifestyle cost one dollar less in the future. That’s it – three dollars for every one saved.

The year’s coming to an end and squirrels need to get busy! Double check your 401k or IRA limits and do your best to get them maxed out now!

Have a great weekend!

Image Credit: Pixabay

4 thoughts on “Squirreling Away Savings

  1. Excellent reminder for those on the front end of FIRE. I have two young millenials working hard to max their 401ks out. They aren’t quite there yet (mid and late twenty-something year olds), but both are well on their way. I imagine both are way ahead of 99.5% of their peers on that front. I have always explained it by talking in terms of their older selves. I explain that older Kathy (substitute your millenial’s name) will appreciate the compounding opportunity that younger Kathy is giving herself. Every dollar has a great chance to multiply many times over, while also keeping older Kathy’s expenses much lower. All great reminders for anyone working hard to FIRE someday.

    Liked by 1 person

    1. Great advice! Our son is finishing his Bachelor’s degree next June. He started a investment account and has been squirreling away $ since he was 19. He’s already accepted a software/web developer job starting next June and I’m hoping he quickly maxes out his 401k.

      Like

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