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Plan Well, Retire Well

Saving and investing your money

Accumulating Actions: Saving for Retirement Early


During my college years I discovered it to be quite difficult to save for my retirement. As a financial planning student I knew it was something that I absolutely HAD to do. It was deep-rooted in my brain to save early, save often, and you'll have millions of dollars (no guarantees implied!) by the time you are ready to retire. Unfortunately life got in the way of all that, and I promised myself that I would use the knowledge and techniques I had acquired over the course of my education once I had started my career. Below are some actions I have incorporated in my push to accumulate assets for my financial future:

Being Aware of Biases

While in my master's program, I had the opportunity to take a behavioral finance course. One of the biases I learned from this class was Self-Control Bias­. "Simply put, self-control bias is a human behavioral tendency that causes people to fail to act in pursuit of their long-term, overarching goals because of a lack of self-discipline." (Pompian, 2012) After becoming conscious of this bias, I realized I had this tendency to put off my long-term goals. Awareness of the bias can help you to start seeking information on how to overcome it. One of the ways I have learned to overcome it is by planning financially for my future. Although I don't have a clear picture of what "my retirement" looks like – I know that it's important to me to fund it.

Start Small

One of the biggest challenges I had when I started planning for my retirement was figuring out how much money I should put away for retirement. Knowing how much to plan for seemed like a daunting task. My 1st plan of action was to start small. Every little bit counts, and while the money is invested inside of your retirement account – it can grow and earn interest. You want your money to work for you, no matter how much or how little you add to it. Plus if you don't contribute - you may be missing out on an employer match – which essentially is free money from your employer. Who doesn't like free money for their future?

Start Today

Having a new job is exciting especially for younger individuals and those just joining the workforce. These people are typically thrilled to finally have a significant paycheck and real money to get themselves started with their new chapter in life. Alongside this newfound freedom and excitement usually lies impatience and wanting to achieve all of their hopes and dreams right from the get go. Acquiring assets, having kids and other life events quickly take precedence and push saving for retirement into the back corner. Though it may be easy to say "I'll get to this next year" usually that type of thinking leads to more delay and more difficulty saving enough to have a comfortable retirement. However difficult it may be to save in the midst of newfound options and freedom, the time to start is now, so the 2nd part of my plan of action was to start contributing to my retirement account from my very first paycheck. That way I wouldn't even notice the difference in my paycheck because my contribution had already taken from the start.

These actions of being aware of my self-control bias, starting small and starting today has helped me to start to the accumulation phase for my retirement and these accumulating actions are just what I needed to get started!

Pompian, M. (2012). Behavioral finance and wealth management. (2nd ed., pp. 211-222). Hoboken, New Jersey: John Wiley & Sons, Inc.



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