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401k Heads to the Gym

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It seems weekly that my wife asks me when I’m going to start working out again. I usually have the same old answer, “Soon.” I can assure you that answer won’t suffice for much longer.

Unfortunately the same response can be found for many hard working Americans out there regarding their 401k, “Hey, when are you going to start saving?”


If you think about it, your 401k is a lot like working out. Every day you tell yourself one of the following (or all three):

1. “I am going to get up early tomorrow and hit the gym” = You are going to sign up for your 401k and start contributing to your account.

Result: You hit the snooze bar. It never happens.

2. “I am going to the gym once a week, but now I’m going to go five days a week” = You are going to increase your contributions to your 401k.

Result: You rationalize that “starting next week” you’ll go five days a week. It never happens.

3. “I need to revisit the exercises I’ve been doing over and over and over for the last year” = You are going to take another look at your investment options.

Result: You look in the mirror and expect a different result. It never happens.

Studies show that if you have a personal trainer, you’ll likely get a lot better result. Your 401k is no different. Here’s the good news, 401ks don’t have to be nearly as painful as running your brains out on a treadmill. But for many the first step is just getting started. Here is some motivation:

What does it really cost you to delay? A lot actually.

Suppose you have a current salary of $30,000, receive 4% annual raises, and plan to retire in 30 years. You put 6% of your salary into a retirement plan each year and earn an 8% annual return.
• If you started investing today, you’d have $331,416 when you retire.
• If you waited 5 years before investing, you’d have $247,317 (assuming the same retirement date, salary, raises, savings rate and return).

Waiting five years would cost you $84,099!!!!!

Let’s be honest here – as we live our daily lives we just don’t think about 401ks on a regular basis. But if we don’t spend a little time on it, or find someone to help us (hint: blooom) then one day we wake up and we don’t have anything to show for it. Same holds true for ignoring going to the gym, except one day we wake up in the ICU hooked up to a thousand electrodes having just survived our first heart attack.

Both of these dire outcomes are preventable. Your 401k doesn’t have to turn into open heart surgery. You can get help for it. And you should.

Published on August 5, 2014