You may not be thinking about retirement in too much detail right now, but, chances are, you would like to retire someday, or at least have the opportunity to step away from the daily grind and do something you truly love in the future.
Well, that’s what retirement planning is really all about. Should we call it something different? Future You Planning? Own My Future Planning?
And, frankly, if you want to have the future you dream of (teaching music, traveling, quitting your job and starting a gym) you need to do a little planning and saving today. If you’re already saving through an IRA or a retirement plan at work, you need to know that it is working just as hard as you are. One way to do that is to choose low cost funds.
Inc. Magazine explains it pretty simply in their article Why One of the Biggest Perks of Retirement Planning Has Nothing to Do with Retirement.
What You’ll Get for What You Save
Nine years is the average amount of time it takes to double the value of your nest egg, assuming about an 8 percent average annual return and no added contributions.
1.27%
The annual fee you’ll pay for the average actively managed mutual fund.
18.2%
The amount of the average stock investor’s return that would have been lost, over the past 10 years, to that average fee.
$344,730
The amount you would lose over 30 years to that fee, assuming you started with $100,000 and averaged an 8 percent return before investment management fees were deducted.
$1,632
The amount of additional monthly retirement income that you could generate for 30 years from that $344,730. (Assumes a 4 percent rate of return while in retirement.)
So, it’s not always about skipping the latte, it can be about smart investment decisions.
Looking for more information on this subject? Check out:
Roth 401(k) vs. Traditional 401(k)
Take an Active Role in Paying Off Student Loans
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