The Real Retirement Secret (How to Maximize Your Retirement Savings)

Here's the secret to retirement success from the Motley Fool:

Save that money. All the time.

Nice "secret." I like it.

Next, they add a few details:

If you want to have a comfortable retirement, saving is much more important than picking better investments, especially in the beginning years. I've been telling friends and family this for years, and it's based on some reasoning that ought to be intuitive to anyone: Until your portfolio is pretty hefty, the amount you can save each year will dwarf the amount you stand to make with market-beating investment returns.

They then do a comparison that I love. If you've read Free Money Finance for any amount of time, you know how I love saving money and how I advocate it as a great way to grow your net worth. The Fool shows the impact of small little savings decisions (changes in lifestyle) and how they can add up to big numbers over time. The numbers are mind-blowing on their own -- and when you add in the fact that you can also get an employer 401k match on the money you save, things really get crazy!!!! (in a good way!)

Here's how they sum up:

Of course, I don't want anyone out there to think I'm advocating lackluster investing. In the best of all possible worlds, you save like crazy and you earn like crazy, too. But the point remains, for beginning investors and retirement savers, the real key to future riches is finding money to save from yourself, not finding a couple of extra percentage points worth of market returns.

I've said over and over again that the key to growing your net worth lies more in controlling your expenses, spending less than you earn, and saving money than in making more money, maximizing your investments, and the like. Unfortunately, saving money is much less exciting, so it doesn't get as much attention. However, the good news is that it's much more controllable than growing your income -- which is great for those of us who truly want to maximize our retirement savings.

Comments

[Randall Wilson]

Great advice that very few Americans are taking. For the second time in the country's history the the average per capita expenditure is -0.5%. We are literaly spending more than we make.... and the last time that this was the case was the great depression.

-Randy
www.4mysales.com