College Connect: One financial regret

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By Hilary Davishillary mug

I don’t have many regrets in life. I don’t like to be haunted by “what ifs.” But if I could turn back the clock, I would start saving for retirement from my first paycheck.

When I completed my undergrad and entered the professional working world in 2006, my 401k was the furthest thing from my mind. Retirement is for old people. I was 26. I was young, and was always going to be young, right?

If you have to age — and if you’re lucky, you will — then at least take advantage of compound interest along the way. Compound interest is what makes your 401k great.

Barron’s illustrates this by showing the power of saving early. Put $3,000 a year into a 401k for 10 years, starting at age 20. By age 65, that $30,000 investment has grown to nearly $750,000 at 8 percent interest. Not bad for only 10 years of attention. For a newly minted graduate, $30,000 may be almost a full year’s salary. But it’s a long game. Now, if you start socking away at the still-young age of 35? You could save $3,000 a year for the rest of your career, and by 65 you’d only have $367,000. That’s not couch cushion change, but it’s enough to make me — er, anybody — regret not getting started sooner.

About a year and a half ago, I wised up, and started saving modestly. I only have about $1,200 in my 401k, which is better than the nothing dollars and nothing cents that were in there before. I’ve stepped away from work to finish my master’s degree, but once I get back in the game, what’s the first thing I’ll do? Resume my 401k contributions. Make sure it’s the first thing you do, too.

Hilary Davis is a student at Arizona State University 

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