Just contributing to your retirement savings is not enough. You’ve got to make them earn decent returns so their compounding effects significantly add to what you eventually accumulate. To settle for pathetic investment earnings makes saving for retirement only a contribution game with meagre results. This article shows the kind of earnings you need to compound your way to a decent retirement.
Government-regulated retirement programs, like your 401(k), 403(b) or IRA are geared to help you save for retirement. Though their annual contributions are limited, they’re deductible from you working income. This helps you contribute more to your savings than using after-tax dollars. Their tax-deferred growth allows all your earnings to contribute to the compound rate of your savings without any loss annually to income taxes.
I’ve constructed an example to show how important it is to get decent earnings on your investments to accumulate significantly more and to make your earlier contributions pay off. (more…)
