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Its quite important for you to appreciate that the most critical variable in the wealth accumulation equation is the amount of time your wealth compounds and grows.
If you wait just six years to get started and your assets grow at 12% annually, you will have half as much money when you retire compared to starting today (assuming equal contributions over your working lifetime).
If you wait just twelve years you will have only a quarter as much.
That’s a life changing difference in net worth for just a little procrastination. Just getting this one idea into your bones early enough can change your financial future. It’s that important.
The power of compounding especially when investing for your retirement is an invaluable wealth-building tool because money grows geometrically instead of arithmetically — but only when you give it time to work.
Procrastination kills time, and as a result it kills more plans for retirement security than all other culprits combined. It is wealth suicide on the installment plan.
Every day you delay is another day where opportunity is thrown away.
Many people procrastinate because they feel uncomfortable and out of place making financial decisions. They feel ignorant or the subject seems dry and complicated with confusing technical jargon.
Get over it!
Nobody is born a financial genius. Everyone has to start somewhere. Just get started and fumble through it. Silly mistakes are better than doing nothing at all.
Every day you wait puts you at a greater disadvantage. The more time that passes before you start, the harder wealth building will be for you.
According to the Schwab Center for Investment Research, workers who begin saving or investing for retirement in their 20’s can safely save between 10-15% of their income and achieve financial security. If you wait until your 30’s the percentage required rises to 15-25%. Ouch!
If you wait until your 40’s the percentage is an astronomical 25-35%. If you’ve reached your 50’s or 60’s and haven’t yet started to save then the only viable strategies for financial security are non-traditional and outside of the normal “save and compound grow” formula. They require leverage, additional risk, and a totally different skill set.
Clearly, the earlier you start the easier the process is to swallow.
The reality is anyone reading this article will have more than enough money pass through their hands during their lifetime to secure the retirement of their dreams, yet few will succeed at the goal.
Are you letting the procrastination monster stop you from retiring early and wealthy? What are you going to do about it?
Up to this point we’ve summarized the tried and proven wealth building formula for most self-made millionaires as follows:
Notice how it is the opposite of get-rich-quick: it is the slow and steady path to wealth.
Get-rich-quick uses various principles of leverage which increases the risk and lowers the probability of success. It’s faster, but less likely.
The slow-and-steady method requires more discipline and time but the odds for success are extremely high if you actually do what it takes. It’s a proven formula that just plain works.
But only if you work it.
Our character … is an omen of our destiny, and
the more integrity we have and keep, the simpler and nobler that destiny is
likely to be.
– George Santayana
The way to work the “save and compound” strategy is to begin the process early enough in your career so that you have lots of time.
If you get started late you will either have to save an impossibly large portion of your income or apply a leveraged strategy to make up for lost time.
Regardless of the path you choose while investing for retirement, your wealth is always a function of the amount of investments multiplied by their rate of growth and the number of years they grow. The math is always the same regardless of the strategy. It’s inviolable.
Return from investing for retirement to early retirement