Life is a Song68856

Not necessarily. Actually, it depends on your definition of hard. I began a 401K and pension fund when I was hired on at my company 24 years ago. Today, I have a nice retirement. But that was just my individual case and Im sure your circumstance is far different. So lets focus on you, instead. Whether youre twenty or forty, you have to make a tough decision. You have to do without something now to benefit later. In other words, you have to save money now, and that means sacrifice.

The younger you are, the less you have to give up. Thats because your savings multiplies faster over a longer term. Hence, you can put aside a small amount and watch it grow using the magic of compound interest. Assuming that you can get a 5% return on an average investment, we can run a simple chart. That return is based on most common tables that are not tied to equities or bond funds. Although most experts would agree either should generate that type of return. Even guaranteed CDs, or certificates of deposits, backed by FDIC for safety sake, can offer similar rates. But whatever device you choose, lets use that number.

So lets look at one example. Suppose you are 25 years old and make $10 an hour or $400 a week or $1600 a month. After taxes thats about $1200 monthly. I want just $150 of that, for your monthly investment. Figure that if you were to give up a Starbucks coffee costing $5 every day, theres your $150 a month. Do that for the next 40 years and youve given me $72,000. But, by investing the monthly amount in a 5% returning account, the compound interest turns this into $228,900 by age 65. Not bad for someone doing without a Vente Caf Mocha Latte every day. Now, as you make more with raises, job changes, etc., and you could quadruple that investment, youve got over $1,000,000 for retirement.

But Ive got an even better plan. Could you squirrel away $5,000 for that first year? I know thats a lot to ask, but hear me out. If you could manage to put aside $10,000 over two years and invest it, never putting in another dime, you wont be able to guess what you would amass after 40 years. $50,000! But, if you could somehow get a 10% return instead, investing the same $10,000 for 40 years we would make you about $500,000! That is an example of how the interest rate affects the return. And there are ways to generate a 10% return using equities or mortgages. I suggest you talk to an investment adviser for that information.

The great advantage of this plan is you: (a) didnt have to give up much, (b) dont have to be an investment wizard, (c) let time and compound interest work for you, and (d) can look forward to a healthy retirement. Of course, the more youre willing to give up now, the greater the end result. But working harder isnt the answer: its saving smarter and earlier. Therefore, if youre in your twenties and figure retirement is decades away, youre right and that can work in your favor. So start planning now and the rest will take care of itself. Savings for retirement is hard? Myth busted!

Jeffrey Hauser was a sales consultant for the Bell System Yellow Pages for nearly 25 years. He graduated from Pratt Institute with a BFA in Advertising and has a Master's Degree in teaching. He had his own advertising agency in Scottsdale, Arizona and ran a consulting and design firm, ABC Advertising. He has authored 6 books and a novel, "Pursuit of the Phoenix." His latest book is, "Inside the Yellow Pages" which can be seen at his website, http://www.poweradbook.com. Currently, he is the Marketing Director for thenurseschoice.com, a Health Information and Doctor Referral site.