A Minor Change That Could Have a Massive Impact on Your Retirement Efforts


The retirement numbers in America don't paint a pretty picture. Half of Americans have saved almost nothing, according to data recently made public by the Center for Retirement Research. Fifty years ago, this would have been bad news. Today it's a veritable cataclysm -- a retirement Chernobyl just waiting to melt down.

We don't have pension plans anymore -- unless you're really lucky or a government employee. And many of the pensions still around seem ripe for the budgetary scalpel.

We no longer have 16 workers paying for every Social Security beneficiary. Today it's three to one. Soon it will be two to one. Demographics are putting a massive strain on social security and other programs. Future funding is uncertain.

We're also living much longer. Many of us will outlive our retirement by 25 or 30 years. Some even longer.

Given those sobering facts, it seems odd that Americans are blithely unconcerned about the looming retirement crisis. Perhaps many of us are in denial. We think we'll simply work forever.

Or maybe we've become fatalistic. It seems hopeless, so why worry?

That's a dangerous attitude to have. Yet there is good news if you're willing to look. In fact, there's one fairly minor change you can make today that will pay major dividends in the future. It won't really cost you anything -- and it's available to virtually anyone.

Funding retirement with money you'll never miss

When asked "why aren't you saving?" many of us protest that we can't afford it. Yet this is almost never true. Instead, we choose to privilege our current lifestyle over our future security.

Yet the surprising thing is that we don't have to worry about a material decline in lifestyle. You can make a meaningful step toward building wealth by using money you may not even be aware you're spending.

A recent article in the Washington Post pointed out a highly compelling fact. The average American household pays $231 each year to rent set top boxes from TV providers. These boxes cost around $8 per month. The average American house has about three.

Federal lawmakers surveyed the top satellite and cable firms to gather this data. They aren't happy with the results -- and consumers should share their outrage. Regulations could be on the way.

Here's the thing, however -- we aren't being forced to hand over $231 each year in perpetuity. We just do it, largely thanks to the power of inertia.

Yet what if you took that $231 and invested it in a low cost index fund? What if you repeated that tactic for every unjustified expense in your life? Useless credit card charges? Avoidable late fees? Expenses for services you don't even use.

This is what will happen -- you'll start building a nest egg. It won't be much at first. Yet even modest contributions can make a serious difference thanks to compounding.

Those cable boxes you're spending $8 a month to rent? If that money were invested and returned seven-percent over 30 years, you'd have $22,000. A ten-percent return would bring you $39,000.

And that's just a few cable boxes. Every unnecessary expense you can ferret out will boost your savings that much more.

Even if you don't have a 30-year timeline to work with, you can still make substantial progress. A 45-year-old who can find $40 each week to invest will have more than $110,000 in 20 years, assuming a ten-percent return. A 55-year-old can raise around $65,000 in 15 years by following the same process. The point? It's almost never too late to assert control over your financial future.

The key is to find money you're wasting and always invest it. The beautiful part? It won't have any real effect on your day to day life. You'll help fund your retirement by using money you may not have even realized you were spending.

That's a smart strategy that anyone can -- and should -- endorse.

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