Generation 42

Archive for August, 2009

“I would happily up my 401(k) to the maximum,” Judy said, “but I can’t afford it.”
It was actually quite a few years ago when my mom died and left me what I thought was a nice inheritance. At the time, I had just a few credit card bills—not more than, say, $2,000. But I sure loved having more money in the bank. My partner and I had been living together then for about eighteen years, and we had always had a nice sharing relationship financially. But things seemed to change after I got that money. Before I knew it, I had spent more than half of it, on things I had never really given much thought to before. And Deb, well, she started to spend more, too. Before I knew it, our credit card bills were up to around $7,000. And that was before we bought our new apartment. But now I’m getting nervous about the future. I have a 401(k) plan at work, and I put in 6 percent, which is what the company matches. Deb doesn’t even have a retirement plan at work. I probably should put more money away for retirement, I know it makes sense, but I really can’t afford to, not with the mortgage and everything.
Judy had it backward. In fact, she couldn’t afford not to put more money away for retirement. Having worked at the same corporation for twenty-seven years, she had missed out on thousands upon thousands of dollars she could have saved painlessly, effortlessly, and tax-deferred. By receiving a little less in each paycheck, she would have earned herself far, far more in the long term for her retirement, which would be upon her not too many years down the road.