Most American workers are responsible for their own retirement savings. They are expected to figure out 401(k)’s, Individual Retirement Arrangements (I.R.A.s), stocks, mutual funds, etc., etc. … by themselves. For those who understand their retirement account and investment options, that’s a good thing.  But those who don’t understand their options are at high risk of never having enough money to retire. 

Recognizing that the vast majority of us never take classes on personal finance or investing –  those are not required classes in high school or college – we’d like to offer some help.  This article shows how you can get on the path toward a comfortable retirement, no matter what you do for work or how much you earn.

1. Pay yourself first.

You work hard to pay everything and everyone else. Just don’t  forget to pay the most important person: Yourself. Think of the money you save as money that are paying to your future self.  Here are a few hacks you can use.

  • Automate, automate, automate. Your 401(k) contributions are probably taken automatically out of your paycheck – that’s good. But also, set up automatic deposit into your IRA account. Out of sight, out of mind. When you like that you don’t have to agonize over every decision.
  • Take the free money from your employer. If you’re lucky enough to have a job where the employer offers a 401(k) plan or other tax-saving retirement accounts, take it. Contribute as much as the employer will match. Not doing so is like walking past $20 bills on the street and not picking them up. Besides, that is money you earn as an employee. Also open an IRA and contribute to it regularly.
  • Increase contributions automatically. Ask your employer to increase your 401(k) contributions by 1% next quarter or next year automatically. By increasing your contribution from, say 5% to 6%, you’ll save more and won’t even feel the difference.

Make paying yourself a habit. Aim to pay yourself at least 10% of your income each month. You must set this money aside in a place where it is not readily accessible, like an investment account. We tend to spend money in that is in our pockets or in a debit card impulsively on things we don’t need.

2. Spend less than you make.

The use of phones, credit cards, and online purchasing has made spending money much too easy. If you’re not careful, you’ll waste a big chunk of money every month on things you don’t need. Spending $8.99 here, 12.99 there, etc. doesn’t feel like much, but over time, it can be the difference between struggling financially and living well. To avoid wasting money, all you need to do is pay slightly more attention to your spending habits. Here are a few tips you can use – think of it as the price of getting wealthy:

  • Use Cash More Often. Swiping a credit card or a phone to make payments is so convenient and easy that we tend to just do it without even thinking. Using cash feels different; makes you more aware. To save money, leave your credit card home or use it only for emergencies. Try and figure out what you’ll need for the week and take it out of the ATM. When you run out of cash, stop spending.
  • Brew your coffee at home or at the office. At $2-$5 per cup, two or three cups a day, the money you spend on coffee can add up quickly. By drinking the coffee you brew at home or at the office, you’ll save over $100 every month. That’s $1,200/year or $146 thousand (compounded at 8%) over 30 years – in just coffee!

3. Put your money to work wisely.

The key to winning the retirement game is to create an income stream that continually flows into your pockets. For this to happen, you must trade your cash savings for assets that can produce more cash later. There are three basic ways to put money to work: (1) lend it and receive interest payments, (2) buy real estate and receive rent payments, or (3) buy buy businesses (or pieces of businesses called stocks) and receive dividend payments.

Albert Einstein called the magic of compound interest “the eighth wonder of the world” for good reason. For example, the following table shows the possible results of saving $100 per month regularly and compounding it a different rates over a number of years:

  Expected Results of a $100 invested every month

Annual Returns

8% 10% 15%


10 Years  $    18,774  $               21,037  $            28,019  $          37,380
20 Years  $    59,307  $               75,603  $         141,372  $        268,830
30 Years  $  146,815  $             217,132  $         599,948  $    1,701,909
40 Years  $  335,737  $             584,222  $      2,455,144  $  10,575,155

For the past 100 years, stocks as a group have produced compounded annual returns of about 10%. You could earn less or more depending on which stocks you buy and the price you pay for them. But the point is that stocks are by far the best way to make your money multiply over time, eve if you invest only a small sum each each month.

4. Focus on lifetime goals.

As you put your savings to work, be patient and exercise caution. Do not be persuaded by the promise of huge returns or “get-rich-quick” schemes. Invest only where there is a strong chance you’re money is safe and a chance for a fair profit. Sure the markets will fluctuate, and so will the value of your investments from time to time. But remember that you’re investing for long term success. Keep your goals realistic and attainable – like a cool one-million-dollar retirement goal – but don’t react to the market’s ups and downs.

5. Seek advice from those qualified to handle money.

Unless you have the time and knowledge necessary to handle your own investments, seek the advice of qualified investment managers whose business it is to make your money grow. There are different kinds of firms and individuals who provide money advice for a fee. Before hiring someone, be sure to understand exactly how they propose to handle your money, what fees they charge you, and what their legal obligations are.

For example, a broker is not obligated by law to act in your best interest. Simply to recommend suitable products. Brokers get paid a commission every time you make a transactions. Investment advisers, on the other hand, are obligated by law to act in your best interest, putting their own best interests and any potential conflicts of interest aside. They also get paid a % of the value of your account, so the more you earn the more they earn- thus your interests are aligned.

There are many excellent investment advisers to choose from. Be sure to hire one whose investment philosophy, strategies and process you understand. We, of course, recommend Abbilon Investments. To learn more or to receive a free investment plan from Abbilon, click here and “get started” .


The information provided herein is for general educational use only. It is not intended as investment, legal or tax advice. Abbilon Investments, LLC is an investment adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level of skills. The information provided in this article does not represent any offer or solicitation to buy or sell securities. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives, charges and expenses. Abbilon’s internet-based services are designed to assist clients in achieving discrete financial goals. They are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client’s financial situation and do not incorporate specific investments that clients hold elsewhere. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature.

Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value.

Back to Top