Matthew's Foray into Blogging

Thursday, August 25, 2005

Saving for Retirement

We all know the importance of beginning at an early age to save for retirement. The message is everywhere.

Actually, maybe this is not common knowledge. In an August 20, Washington Post article, “Initiatives to Promote Savings From Childhood Catching On,” Amy Goldstein wrote, “Since the early 1990s, the typical American’s savings rate has plunged from $7.70 per $100 earned to $1.80, according to federal figures.”

Nonetheless, starting early is essential. Houston Chronicle columnist Shannon Buggs wrote in a February 16, 2004 column, “A person age 20 who saves $120 each month and invests that sum in mutual funds or other securities that pay an annual return of 8 percent or more can retire at age 65 with a $1 million portfolio, [according to James Trippon, a Houston money manager, certified public accountant, and author of How Millionaires Stay Rich Forever.]” Tripton says the key is starting early. The longer one waits to begin saving, the more one must invest.

According to About.com, in stating the power of compounding of earnings,


A 25 year old who invests $2,000 a year for eight years and never invests an additional dollar after the age of 33, will earn more by the age of 65 than a 34 year old who invests $2000 a year for 32 years, even though the 35 year old invests four times as much.

This being the case, I’m never going to be able to retire! :-(

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