Retirement and the $406.00 Soda
self help article
by Kenneth Bateman

Prosperity and financial retirement, pension income, investment earnings, and financial wellbeing self help article:

Do you like Coke? I know I do, and nothing hits the spot like a cold, refreshing Coke on a hot summer's day. I like the 20 ounce one from the vending machine.

They only cost one dollar, and they are pretty accessible wherever I go.

I know you are saying to yourself, "This is supposed to be an article about retirement, not Coke. What are you talking about?"

Well, that is a good point. Have you ever thought about the other cost of a Coke, meaning what that dollar could have become?

The answer is: should you have invested that same dollar at age 18, that Coke cost $406 at age 70.

This is not making great assumptions of hitting that one great big stock, the next Microsoft or Intel. This is at the historical return of the S&P 500, approximately 12% per year.

The point is further driven home in recent commercials on television. The commercial talks about a diamond necklace, and finally posing the question "Is there any other way to show you love for her?"

Then a voice says, and I am paraphrasing, "Well, you could just tell her, and save the money for her retirement."

Think about that. Every one dollar you spend today costs you a small fortune when you are retired. I have worse news for you -- and here is the big secret about retirement -- retirement is when you need the money the most.

I am sure most of you know elderly people who are saddled with medication costs that take up more than whatever Social Security and Medicare provide.

Keep this image in mind, the next time you upgrade to a Super Size meal for just 39 cents.

Those 15 extra fries just cost you $89.85 at age 65, about $6 per fry.

How can you make this money work for you? The first think you need to do is see a financial planner. Undoubtedly, there are many in your area.

Set up an allotment into a Roth IRA, a certain amount each month that goes directly to whatever mutual fund you choose, and forget about it.

Giving up $100 a month starting at age 25 will give you over $1,156,000 at age 65.

If you can scrape $2000 a year or $166.66 a month, at age 65 you will have over $1,900,000.

IF your IRA is a Roth, you will have this money tax-free. You can't do better than that.

Scrape and skimp, save and save.

Pay yourself first, and keep the long-term goal in mind.

You can make your own path for the future. Take the time to cut coupons.

Decide what you spend money on, but never use, and get rid of it.

For example, if you have cable but only watch local stations, get rid of cable and get some rabbit ears. It will save you $40 a month, or $462,000 at age 65.

Frugality and investment are the path to riches and a comfortable life.

Make sure that you make the right choices to ensure you get there.

And no, after learning this, I don't drink Coke anymore.

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Kenneth Bateman is a contributing editor of The Family Budgeteer Weekly Online and Newsletter which can be found at www.familybudgeteer.com

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