25 Years Until Retirement Means 600 Paychecks Left To Pay For It

25 Years Until Retirement Means 600 Paychecks Left To Pay For It

June 05, 2017

Depending on where you are in life, retirement may feel far off. But have you stopped to consider how quickly life is going these days? The busier we get, the easier it is to put off the things that don’t seem pressing, such as planning for retirement. However, before you know it, retirement will be knocking at your door. If you want to feel confident as you head towards retirement, avoid the most common financial pitfalls and follow these three actions:

Save Early

If you are in the first half of your working years and have plenty of financial responsibilities such as college debt, a young family, or short-term savings goals, you may think you can afford to wait to save for retirement. In reality, you can’t. The earlier you start saving, the better. That doesn’t mean you have to max out your IRAs or 401(k)s, but if you save even a small amount early on, compound interest will be your friend.

Do you need proof that this works? If you were to put away $9,000 a year for 15 years, then $18,000 a year for the next 10, you would end up with $740,000 if you earn a 7% rate of return.  By saving earlier, compound interest is on your side, giving you an opportunity to accumulate more wealth in your desired timeframe.  

It may be tough to make the choice between saving for other things vs. retirement, such as your child’s college education, but saving for your retirement increases the probability that your children will not have to take care of your financial needs later in life. They can borrow for college, but you cannot borrow for retirement.

Save As Much As You Can

Let’s take the above example a bit further. If you were to save $18,000 for the full 25 years and experienced the same rate of return, you would end up with $1.2 million! The more you put away + the earlier you start = a higher chance of accumulating wealth and meeting your goals.

But do you know how much to save to maximize your retirement nest egg? The general rule of thumb is to save 15% of your income. You may think you’re doing okay because you are maxing out your company’s 401(k) plan, but the current contribution limit for employer-sponsored plans is $18,000 if you are under age 50. If you earn more than $120,000 a year, topping out your 401(k) every year won’t add up to 15% of your income.

Set aside some time to plan ahead and envision what you want to achieve instead of blindly following popular advice. Once you have your goals in place, it’s easier to prioritize your finances and determine how and where to save your money. If you’re a visual person, you could benefit from the tools available through the financial decision coach program. With one glance, you can see how long your money could last and get a better understanding of how you can tweak your savings to reach your goal. You may get an idea of how much longer you need to work, or how much you need to cut back on your lifestyle expenses to retire at the age you desire.

Choose The Right Investments

Other than saving early and often, what else will make a difference in your quest toward building retirement wealth? The types of investments and investment vehicles you choose to invest in. It’s important to factor in your risk tolerance and ensure your portfolio is diversified in a way that aligns with your unique risk preference.

Once you’ve decided which investments you will use, you aren’t done yet. It’s essential to analyze all your options when it comes to investing in tax-free vs. tax-deferred accounts. Do your research and learn all the ins and outs of IRAs and Roth 401(k)s.  See what choices are available to you if you don’t qualify for a Roth IRA.

How I Can Help

Regardless of whether you have 600 or 100 paychecks left before retirement, I want to help you build a strong financial foundation and make educated decisions with your money. I’d love to work with you to find creative ways to save more, choose the appropriate investments, and live with the confidence that you can reach your goals. Call my office at (949) 221-8105 x 2128, or email me at michael.loo@lpl.com to set up a meeting or if you have any questions.

About Mike Loo


Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@lpl.com.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Trilogy Capital, a registered investment advisor. Trilogy Capital and Trilogy Financial are separate entities from LPL Financial.