Sure everyone would if they could, but an increase in salary is not what I’m talking about here. What I’m suggesting is the most important thing you can do to build your retirement savings: give your retirement contributions a raise. Once you get in a 401(k) or 403(b) and establish your contribution, you can go about the rest of your life and not have to think too much about your plan. Some people think about increasing their contribution, but years can go by before you get to it. After all, there’s more to life than spending every waking moment thinking about your investments (except for me).
So the raise idea is this: set a date every year to increase your percentage. It could be your birthday, your anniversary with your employer, maybe Arbor Day. On that day every year, bump up your contribution by 1%. If you started with, say, 2%, then in 4 years you will have tripled your rate of savings. You won’t miss the extra few bucks each year, and your account balance will grow much faster. It may be the only case where you can give yourself a raise. If you are serious about growing your net worth, don’t ignore this rule.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author’s opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).