At a retirement conference I attended decades ago an official of a mutual fund company that designs retirement plans for companies warned the leaders of these firms.

“You must educate your workers about these plans,” he told the employers.” For many of them, this will be the only chance they have to accumulate significant savings.”

Many of those workers of my generation didn’t pounce on the chance to accumulate significant savings that would make a big difference in their lives. Indeed, in a world in which millions of people of my generation have not saved nearly enough to secure a comfortable retirement—I am a Baby Boomer, born in the early 1950s when many people could depend on pensions—those words were prophetic.

My Luck

Luckily, my wife and I are not in that group. As a middle-aged reporter/editor, I didn’t have to be sold on that saving idea. I was in the process of taking and applying that advice when I went to that conference. The result is my wife, the ever-comely Suzanne Hall, and I are fairly comfortable in our senior years.

I wish the same for everyone, but I know that is not the case.

Those at Risk

Many Americans never got that start saving for retirement message. Many American households between the ages of 55 and 64 have a woefully inadequate amount of retirement savings of about $100,000, according to Boston College Center for Retirement Savings.

“Our National Retirement Risk Index [the NRRI], based on data from the U.S. Federal Reserve’s Survey of Consumer Finances, shows that about half of today’s working-age households won’t be able to maintain their pre-retirement standard of living in retirement,” according to Alice Munnell, director of the center.

“The reason is simple,” she adds. “We need more income because we are living longer and continue to retire relatively early. But we will get less from traditional sources. And interest rates, which determine how much income we can draw from our nest eggs, have fallen to historic lows.”

These households are going to have trouble maintaining a standard of living in retirement. Indeed, today I know a number of people of my generation who have almost no retirement assets. They live only on their Social Security payments, which average about 15 thousand dollars or so a year. They have very difficult golden years, often working at jobs they hate.

The Last Generation and This One

The warning at that conference could also be prophetic for the generation behind me. I hope it is not so. This blog is, in part, dedicated to changing that. That’s because one of the purposes of is to ensure that the people behind me—much younger—can have the benefit of my lessons in decades of writing about saving and investment.

The point is to become the master of one’s finances at any age but especially when one approaches the golden years in which one wants to spend the rest of one’s life doing what you want to do. Only considerable assets can ensure that.

Getting to Financial Independence?

Remembering the words of that mutual fund official, the sooner one starts saving for retirement—even if one is only starting with small amounts—the better it is; the more likely one can end up with a big, comfortable final balance.

Indeed, lots of years of saving are best. That allows the compounding effect to take place for the maximum period. This, combined with sensible investments, taking full advantage of matching and tax breaks are how one achieves a comfortable retirement.

How Can I Do It? Here’s How

That means committing to a consistent retirement saving policy as soon as possible; think of saving and investing as a regular monthly expense, the same way you pay any other bill. And the sooner you set up this system, the better.

Can you begin in your mid 30s and save for 30 years? Good. Can you begin in your mid 20s and save for 40 years? Better.

Does your employer have a retirement saving match at work? You put in six percent and then the employer perhaps puts in six percent, which is a way that six percent becomes twelve percent.

The First Step

How does one begin?

Just do it.

Join your retirement plan at work. And, if you don’t have one at work or even if you do, start your own retirement savings program—an Individual Retirement Account (IRA). Let the government start supplementing your retirement contributions by giving you a tax break (And remember, this could be very important over the long term. Taxes, especially if one lives in a pricey place like New York, could be the biggest expense of your life.)

And, back at work, the government, in most cases, will allow your six percent contribution to be deducted from your taxes. That makes it easier to contribute because the government is partly funding what you contribute.

But time is a critical factor as I mentioned above. You begin at age 35, say contributing $300 a month, and let’s say you earn about nine percent a year. This is roughly the long-term stock market return. After 30 years, you have some $553,000. Not a terrible number because there are many elderly Americans who don’t have nearly that as the Boston College numbers prove. But you could do better.

Let’s say you started 10 years sooner, contributing the same amount and getting the same rate of return. Then you have some $1,414 million. That’s almost 200 percent more than the person who waited 10 years to start. The extra time was critical. How much you contribute can also increase your final balance by a lot.

Say you contributed $500 a month over 30 years at the same rate of return. Then you have some $922,000. But start ten years earlier with the same amount and Mon Dieu! What a difference. You have about 150 percent more or some $2.3 million.

I Need More Time

Want more years because you didn’t get started early? You can get them under some circumstances. Most of these tax advantaged retirement plans such as 401(k)s or IRAs allow you to start taking money out without penalty at age 59.5. But don’t do it unless you must. Indeed, I would advise delaying withdrawals as long as possible because when you withdraw you start to pay taxes.

By continuing to work in some form you can keep contributing to the plans until age 70.5. That is what I continue to do because I like to work part-time and because we have income sources other than our retirement plans that we now use (I consider this a smart tax strategy. That’s because I am using my taxable accounts for income now and letting my tax deferred build up for a longer period).

So keep contributing to these tax deferred plans as long as you can or at least delay taking from them if you can. It can make your retirement savings go further as allowing a few more years of compounding can make a big difference in your favor.

And for the generation behind me, those just starting out in their first jobs, start saving for retirement as soon as you can even if you only begin with small amounts.

Then you will be among the people who learned the lessons of that investment conference a long time ago.

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post.