“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones that you did do.” When I read this quote from Mark Twain I think of the people I have spoken with in their 50s and 60s who didn’t save enough or properly invest over their lifetime to retire. They regretted never planning for their retirement and delaying consumption for future needs, instead opting to spend everything they had at the time.
If you start saving and investing at a young age, 25 to 35, saving for retirement won’t be all that difficult. It takes saving about 10 to 13% of your income per year to build a portfolio large enough to replace roughly 80% of your final income at retirement, and avoid the regret that Mark Twain is talking about.
However, the longer you wait to save and invest, the more money you will need to save each year.
If you wait until you are age 45 to 55, you are now looking at having to save 20 to 45% of your income each year. That is pre-tax. Imagine having to save that much money each year while paying your mortgage, car payments, possibly trying to help your kids with college and purchasing the necessities like groceries and gas, and oh yeah, paying taxes, too.
There are several guides available online to help you calculate what you need to retire. Here’s one from Vanguard to help you get started.
Now you are starting to understand why the majority of people have not saved enough for retirement. They just never started saving and now, 20 years later, they are more disappointed with what they didn’t do than the things they did do.
Even if you are getting close to retirement age, it is never too late to improve your position by making a financial plan and talking to a professional.
If you haven’t started to plan for your retirement you should contact your CERTIFIED FINANCIAL PLANNER™ Practitioner.
Disclaimer: There is some disagreement about whether this quote originated from Mark Twain. Regardless of who said it, the wisdom of it is undeniable.
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