Why Wait To Participate? It'll Cost You.

Your company's AssetMark 401(k) Plan is a good way to start building your retirement savings now. To get the most benefit from your 401(k) plan, it's also a good idea to save as much as you can.

As employees, we all know the consequences of not meeting a deadline or a quota. You could look at your retirement savings as a sort of deadline or quota – if you don't have enough saved, you may need to keep working, or you won't be able to do what you want to.

That's the bottom line about starting to save as early as possible through your company's AssetMark 401(k) Plan: saving now to have money later.

For many of us, though, retirement seems like something far, far in the future. For others, even though retirement may be creeping up, we just don't save as much as we could.

First, let's look at the cost of waiting to save through your 401(k) plan:

What is compounding of earnings?

Investment earnings can come in many different forms – examples are dividends, interest and capital gains. When you reinvest the earnings from your investments, those prior earnings can produce additional earnings. This concept is called "compounding." You benefit from compounding in an AssetMark 401(k) Plan because all of your investment earnings remain in your account.

Look at the chart below. It illustrates how much money it could cost you (based on a $100 monthly contribution and 8% annual return) if you wait one, five or fifteen years to begin investing in your future.

Second, let's look at why you should consider making the maximum contribution possible in your company's 401(k) plan.

The maximum amount you can contribute to a 401(k) plan is the lesser of $15,000 or 100% of your compensation (this amount is adjusted annually). The more you contribute, the more you might have in savings and earnings (based on investment performance).

Example: If you start saving $100 a month in your company's 401(k) plan, and it earns just a 7% rate of return, you could have $122,000 in 30 years. But if you save only $50 a month, you'll have half that, or about $61,000, in savings (without accounting for compounding).

Remember, too, that a regular savings account is taxable, so putting the maximum in your tax-deferred 401(k) plan means you save more.

Making a larger contribution, versus saving only the minimum, gives you the maximum benefit in taxes and in the amount you can invest for your future.

"But I can't afford to make a 401(k) contribution!"

Most of us believe that our paychecks are already spread pretty thinly. There's food, rent or mortgage payments, perhaps tuition loans to pay off, expenses for you and your family's clothing and care. And every once in a while, we want to enjoy ourselves. It seems like a lot – and it truly is.

Saving through your 401(k) plan may take some planning. Here are some thoughts about ways to make it possible to contribute to your retirement:

Let's figure that through economies like these, you save $50 per month and contribute that to your 401(k) plan. If you invest the $50 and average an 8% return compounded monthly, its value in 25 years would be $47,868. (Just for comparison, if you put the $50 per month under your mattress, you would have $15,000.)

Saving for your retirement doesn't necessarily mean you have to completely change your lifestyle right now. Small changes and thoughtful spending with an eye to the future could make the difference.

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