Better Later than Too Late When Saving for Retirement

Basics, Financial Education, Markets, Thoughts of a Mastermind 9 Comments


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Today, I welcome Owais who blogs at Simple Money Man. For those of you who don’t know him, here’s an introduction:

Hello, I’m Owais and run the website Simple Money Man. Today, I’m grateful to have the opportunity to have a spot on The Mastermind Within. A bit about myself:  I started working at the age of 15 (part-time of course because of high school). While I earned a Bachelor’s Degree in Information Systems Management, I realized I enjoyed Accounting a lot more. As a result, I earned my MBA in Finance.

Even though I’ve spent over 15 years working in the Accounting & Audit industry, I’ve only been interested in personal finance for a few years! With a desire to learn and share simple yet effective concepts and ideas on investing, saving and ultimately retirement, I took the plunge and created my website. I hope you enjoy the post below.

better later than too late

Do you ever wish you’d started saving for retirement earlier? Do you think you started too late? Or do you think you should have put more money in your retirement fund(s) at an earlier age, even when you may not have had other obligations like a mortgage or a family.

If you’re still really young and don’t have those thoughts, great, continue to save money. If you do and have answered yes, don’t sweat it because you can’t change the past. But you can continue to plan for the future and maybe even take steps to make up for lost time.

Started Saving, But Just Barely

When I was 20-21 years old, I started saving for retirement. But it was hardly anything. You could almost say I just had an account at work and was contributing maybe $50 a pay period or something. Naively, I thought to myself why should I save for something so far away. What if I die next year or something? I had purchased a brand new Honda Accord Coupe (black on black with leather interior) at that time, was going out with my friends almost every weekend, buying new clothes every year, and taking little mini-vacations for no reason.

I thought since I was saving a little bit, I was fine. I didn’t have any rationale for how much I was saving, just knew I should be doing it and didn’t think too much about it.

Many people out there think the same way. Consequently, many people don’t have enough to live the lifestyle they want 10-20 years down the road, and have to continue to work.  But working as we become older should become more of a choice rather than a necessity. And in order to make it a choice, necessary changes needed to be made in my life.

Later A Spark Went Off

Several years later I was working for a financial services company. Because of my work responsibilities, the position forced me to learn more about investing (e.g., stocks, fixed income products, mutual funds, fees, trading, etc.). So I look a bit of a leap (or rather a hop) and opened up an account with an online broker.

I soon learned that commissions were cheaper with a different broker and switched over – important lesson learned quickly. The point being, it was another way of saving and using the proceeds to save more (e.g., dividends and reinvestment). By the way, now I don’t pay any commission in my after-tax account.

During my time working for this Fortune 500 financial services company, I was increased my retirement contributions, but I still could have done better. I didn’t realize the potential of compounding. This was back in 2011 when the 401k plan limit was $16,500 per year. To max out my 401k, I would have had to contribute $635 a pay period (over 26 pay periods).

At the time, I was contributing about half of that or a bit over $300 per pay period. I missed out on the opportunity to invest $300 more per pay period or about $8,250. From 2011 to 2017, the market has averaged 13%, slightly higher than the historical average commonly quoted. I missed out on some gains by not maxing out my 401k.

s&p 500 performance last 7 years

Source: YCharts

The $8,250 difference alone could have earned me over $1,100 in returns. Now. that I am more aware of the power of the markets, I know what I stand to benefit from in the long-term.

Finally, the Contribution Light-Bulb Turned On

About three years ago, I came to the realization that I should put as much as I can towards retirement. For this, I have the Personal Finance community to thank and will forever be thankful. In the next year or so, I plan to contribute the max to my retirement (I’m almost there).

Along with this, my wife (who’s account I manage anyway because she doesn’t like dealing with it) J is contributing a respectable amount to her retirement plan as well – of course taking advantage in full of the matching contribution.

Ignite Your Spark And Turn On Your Light Bulb Now, Not Later

If you’re trying to catch-up, here are some small steps that can yield big results.

  1. If and when you get a raise, pretend you didn’t and take the extra to increase your contribution.
  2. If and when you get a tax return, pretend you didn’t and take the extra to increase your contribution.
  3. If and when you sell things around the house, pretend you didn’t and take the extra to up your contribution.
  4. If you have a side-job and are earning some extra income, pretend you’re volunteering instead and channel those funds into an IRA and get the benefit of no tax when you withdrawal at the time of retirement.
  5. For hourly employees, if and when you get overtime pay, pretend you didn’t and take the extra to increase your contribution.
  6. If you ever receive an inheritance, pretend you didn’t and increase your contribution.
  7. If you receive a settlement, take as much of those funds after you pay lawyers, and other bills to increase your contribution.
  8. If you’re still trying to catch-up and have maxed out your 401k ($18,000 or $24,000 for employees 50 or over) and IRA ($5,500 or $6,500 for employees 50 or over), just remember that you can always contribute after-tax dollars to your brokerage account and purchase one or many low cost index funds.

I’ve personally taken 6 out of 8 of the above steps.

Don’t Forget Those Pesky Fees!

Of course, while it’s important to focus on doing many or all of these things to increase up your contributions, it’s equally as important to continue to make sure you are getting a good deal on your investments e.g. low fees and proven performance.

Finally, some may argue that if you have more cash and less invested you could be in a better position from a risk of loss via a possibly inflated market. Experts believe a recession can come soon and in turn this can hurt 401k balances. Peter Schiff from Euro Pacific Capital believes a recession can come “as early as next year.”

Although I personally don’t believe in timing the market, I also don’t believe in diving in completely head first either with loads of cash, just to be invested in the market. Start small and build up. Start with what you can afford to invest, be consistent, and let it compound from there.


It’s never too late to start investing and contributing to your retirement accounts. There’s a great quote that is relevant to starting to invest:

“The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese Proverb

Get those contributions up!

So what age did you start contributing to your retirement? Are you taking any steps to catch-up for lost time? Are there any windfalls of cash people can use that I may have missed?


Owais blogs at Simple Money Man. Check out his content for his thoughts on investing, real estate, wise spending, and retirement. I love freebies, and his free Retirement Template is a good one! Thanks for writing this post for The Mastermind Within!

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Comments 9

  1. Factoring in any kind of pay that is not regular and recurring is dangerous and can lead to disappointment. It’s crazy how so much stress is often times self-inflicted.

  2. When I was younger, I always contributed enough to maximize the company match. I did not contribute much more than that and view that as one of my mistakes in personal finance. You can never get those years back, don’t let them pass without taking full advantage of the contribution rate. Tom

    1. Best advice to the younger generation; you can never get back time. And that’s why it’s so valuable. Time in the market VS timing the market, so many sayings and all true
      In the past, I naively liked having more in my pocket and not the restriction of in some obscure account that I cannot even touch. 🙂

  3. Best advice to the younger generation; you can never get back time. And that’s why it’s so valuable. Time in the market VS timing the market, so many sayings and all true
    In the past, I naively liked having more in my pocket and not the restriction of in some obscure account that I cannot even touch. 🙂

  4. I’m glad that my dad educated me on investing at a young age and I opened an IRA and contributed to my 401k when I started my first job. However, if I could go back, I would definitely ramp up my contributions. In the beginning, it is tough and you don’t feel as motivated but if you give it some time…compounding really starts to work its magic and you really see your portfolio grow!

    1. That’s great advice from your dad! And most young people are not receiving enough personal finance education in school or home. Hopefully, that will change soon and presenting numbers growing via compounding is a persuasive method 🙂

  5. Never to late to get started! I saved for experiences when I was younger and looking back I don’t really regret that, I lived abroad in Australia, New Zealand, and Fiji! Once I got a “real” job I started focusing in on things this wasn’t to late in life 2013 23 years old). I tackled the debt from school first and then slowly but surely continued to up my saving contributions. I am very happy I started when I did I have big ambitions and it feels great to make progress towards all of them. Thanks for sharing, instead of people thinking about the years they missed they should think how they will crush the next year and launch themselves forward!

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