Is it too late to catch up on the 401(k) that I stopped contributing to in 2008?
May 11, 2020

Dear Frost,

I have a decent 401(k), but I stopped contributing to it during the 2008 recession. If I don’t have an employer match, is a 401(k) the right choice? What about a Roth IRA or other options? What are some practical things we can do to make room for savings that will have an impact 20 years from now? — Get Me Retirement Ready

Illustration of binoculars with a jagged but trending up line graph.

Hi Retirement Ready,

First, let me just start with a mantra I’d like you (and everyone) to adopt: There is no wrong way to save for retirement. There’s only saving or not saving. So, let’s dig in to your options. If you don’t work for an employer that will match any of your 401(k) contributions, you do have options. You can put money into a Roth IRA (post-taxes) or a traditional IRA (a pre-tax account). You have those options whether you have a 401(k) plan with your employer or you don’t. You can have both! And diversifying your investments is a sound strategy. No matter what kind of retirement account you have, your working guidelines are to contribute between 10%–15% of your income each month to some retirement account.

Get Personalized Advice

If you’re a bit behind on contributing, I recommend a retirement calculator like this one. You’ll plug in your age and how much you can save from each paycheck plus how much you’ve already saved, and it’ll let you know how much you need to save now to meet that goal. There are also a lot of great online tools that can teach you the basics of investing, including how to invest in order to retire when you want. It’s a great tool that doesn’t come with any of the embarrassment that can prevent people from meeting with a financial advisor in these situations. It’s a natural feeling to have, but I’d like to take a moment to say that your investment advisor or “money person” regardless of title should be there to help you! You should be able to bring them your goals and have an open and honest conversation that includes their advice on how to accomplish them.

Start where you can right now. Your biggest asset is time.

Slow and Steady Is the Strategy

Our whole job is to plug numbers in and identify changes that may need to be made. It’s very individual and involves looking at current assets, income, etc., and understanding how everything will unfold over time. When you’re young, you can invest more aggressively and hopefully save more as you make more. We reassess every year, because who knows—you might get to your goal quicker than you thought possible! It’s really about getting disciplined with saving that 10%–15%. Don’t let the goal number worry you. Sure, it might be that someone tells you you’ll need $3 million by the time you’re 65. But if you have that conversation when you’re 30 years old, you have time! It’s a process and everyone starts somewhere. The biggest thing to remember is to start where you can right now. Your biggest asset is time.

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