I was doing a 401k education and enrollment session at one of the health care clinics I service. One of the attendees was especially attentive and she was taking very detailed notes. After finishing the presentation, she approached me for some more information:
“I missed the last 401k education session but was auto-enrolled in the Plan at 4% of my salary. Can you explain the chart and table about the different savings rates?”
I showed her the chart that illustrates how the power of compounding works when you start early as compared to waiting. The comparison shows that the longer you wait, the more is required to save because you don’t have as much time. The other table shows reasonable estimates of the savings needed to maintain your standard of living in retirement.
“I’m 23, and this makes perfect sense to me. I can afford to increase my rate to 7% today. I could always increase that once I have paid my student loan debt off?”
“Yes, your plan allows you to change your contributions at every payroll cycle.”
“Great! How do I make the change today?”
It’s rewarding when they listen to work that matters for their future.