There are numerous ways to prod a person to get busy investing for their retirement future. In the book I am currently writing in conjunction with this site (soon to be available by chapter), I take the more agrumentative tone suggesting that of you know why you aren’t investing, perhaps you will be better equipped to handle what awaits you when you begin or return. On this site, I continue the fact finding on a daily basis.
But other writers pursue the task by suggesting we aren’t saving enough (I prefer investing over saving in part because the risks or masked in the other term), ignore the day-to-day travails that face each and every one of us, or by suggesting, as the Boston Herald did recently, calling it a death sentence.
Charles Jaffe profiled a young divorced mom who has found the whole ordeal no longer worthy of her hard-earned cash. Jennifer, the person he portrays needed to understand the she is leaving not only money on the table (her employer does make a match, which in the world of financial planning is free money) but can also take advantage of the opportunities she has without impacting her short-term goals.
Her situation is somewhat typical, which is sad: “Along the way, however, there were kids and a divorce, job loss and change. Coupling some financial setbacks with 10 years of market volatility that has mostly resulted in flat-line long-term results, and Jennifer’s mutual fund accounts look better than when she started, but hardly look great.”
What she doesn’t realize, is putting aside 5% of her pre-tax income in her 401(K) will not change her take-home pay one dime. She will still face the same hardships but she won’t do it at the expense of any missing pay. She will get less of a return on her taxes using an IRA and the fact that it is done with real money and benefits of it aren’t realized until she files her taxes, makes it hard for the presently cashed strapped investor.
But all of us will agree, not doing anything is not an option. If her company isn’t offering advice, usually for free, she needs to find a financial mentor, someone she trusts. In other words, she needs a sounding board, someone to bounce her budgeting priorities, he investment ideas, and her financial fears around with; a relative, a friend, etc.
The full article by Mr. Jaffe
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