The Million Dollar Mistake

Unraveling the True Cost of Procrastinating on Your Retirement Savings

I often find myself in conversations with bright-eyed professionals and families just stepping into the game of life. You know, that classic scenario where the present seems too demanding to allow even a single dollar to escape into the abyss of a retirement fund. It’s the struggle of wanting that first car, escaping the nest, or simply reveling in the newfound financial power of those initial paychecks.

But let me drop some truth bombs on you—it’s a flawed game plan. The key to real wealth lies in playing the long game. I get it, the temptation to tell yourself, “Just a couple of years without investing won’t hurt,” is strong. But trust me, once you’re on that path, it’s a slippery slope.

So, how do you convince our instant gratification-loving twenty-year-olds to shift their focus from now to the future? Simple, talk about money. Break it down for them—show them the green they’re leaving on the table by skipping out on tax deductions (unless you’re rocking a Roth IRA).

In the most basic terms, imagine you make $100,000. You decide to be financially prudent and invest the maximum 401(k) contribution of $22,500 (2023) into the pot. Now, your new taxable rate is $77,500 instead of $100,000. Crunch the numbers assuming a combined 30% in state and federal taxes, and voila, your after-tax cost of securing your future is $15,750.

*Assuming 30% State and Federal Taxes

*Value of Tax Deduction: $22,500 x 30% = $6750

*After Tax Cost of Contributing to your Retirement = $15,750

Now, let’s have fun and project this over five years ($22,500 x 5 years = $112,500). Assume a 10% market growth (because we’re optimists here) from a total market index fund.

Run it through a compound interest calculator at that 10% market growth, and suddenly your retirement fund is doing a happy dance at $173,601. And guess what? The actual money you put into it over five years after tax is just $78,750 ($15,750 x 5 years). You just doubled your money in just five years!

That’s the real talk, my fellow Christian fathers. The real money you’re letting slip away because you convinced yourself that every dollar from those initial paychecks is sacred. And I haven’t even touched on potential employer 401(k) matches that could sweeten the deal with up to 6-9% of your total pay. That’s more money waiting for you to grab—now!

So, let’s break free from the myth that the future can wait. Your future self will thank you for it. Don’t let this be the million dollar mistake by not starting investing in your retirement today. Using the simple example above, all it takes is 17 years of consistent funding to reach your first million dollars in retirement. And that can happy before you even turn 40…amazing how that works! 💸✨ #MoneyMoves #RetirementReality

-HC