Maximize your Retirement Account

A millionaire-to-do list… I don’t have such a thing, but if I did have a structure it would probably follow J. Money’s to-do-list.

I recently became curious as to the state of retirement account. A gal’s gotta make sure she is covered for such a thing in this day and age. For one, she will most likely outlive the male counterpart (I don’t see how since it’s truth be known that we stress more than the other sex). Second, many women do hold responsibilty to the dual-income household. Third, its just plain common sense that a woman should hold claim to her finances!

Well, I started thinking about how under par I am in this retirement category. And the thought strains my mind as I have no desire to retire at 65, but at a much younger year than that. Well, I don’t know exactly how or if I will reach retirement at a desired younger age. But one thing I know, is I gotta start somewhere. And the easiest place to start is maxing out my 403(b)!

Unfortunate for me, at this time I only dedicate 3% of my gross income to my 403(b). Yet the max 2010 contribution is $16,500. And my company automatically contributes 6% of base salary up to SSWB (social security wage base) .

Potential Outcome

If I max out my 403(b), consider my company’s 6% contribution with the same 6% compounded interest rate, I am looking at $1,671,656 in my pension account (plus the additional consideration of receiving income via Social Security and a Personal Savings Account).

How does one find $16,500 per year to maximize their retirement account?

5 ways to find the money to invest

Here are 5 ways to find the money to invest (For more ways to Invest for Your Future, check out Cooperative Extension System).

  1. Pay yourself first. To start this step, head to your company’s HR department and set up an amount to be automatically deducted. Even if it may be $25 per paycheck. Like I mentioned earlier, I have 3% of my gross income automatically deducted from my check.
  2. Invest your raises. Those annual increases… invest them. Up your automatic deductions with your HR department. I have not done this. *shame* And will be my next step – to figure the amount of my last recent increase and move it over to my automatic deductions. This will increase my contributions this leaves me roughly 73% away from maxing the 403(b).
  3. Continue Installment Payments. Pay off that car loan? Continue to ‘write’ that check, but put the money into your retirement account. This will take place after my debt is payed off. Wow, if I invested my car payment then I am 46% away from reaching my goal of investing $16,500! Note to self: pay off car fast!
  4. Collect loose change. Collect those pennies and put them in a jar. Then every same annual time point, cash it in and put the money into your retirement/investment account. I will consider, but at this time that loose change is used for summertime fun activities for my family.
  5. Make your own lunch. Get up earlier to make your own lunch. I do know this saves me a considerable amount of money by making my lunch compared to eating at the cafeteria. Own the Dollar found he could save $112,000 during his career by bringing lunch to work in a brown bag.

Think collecting loose change could lead up to the remaining $7,100 I will potentially need to max out my retirement account?

And if you need more inspiration to find money for investing into your retirement, consider reading Monevator’s Tin Pot Gold Mine post on Curt Degerman – lived frugally and invested to amass over Β£1.1 million with recycling tins as his only source of income.

Another post you may enjoy: Your Retirement Lifestyle

20 thoughts on “Maximize your Retirement Account

  1. Moon Hussain

    “In 28 years (age minus working years left) at a reasonable 6% compounded interest rate it equals to $64,144 of my company’s money all for me!”


    But ~$16K requires serious freakin’ effort. The whole ‘make your lunch’ thing is very, very true. I’ve always struggled with this and recently have been bringing breakfast and lunch from home, but there are those days that I can’t pack ’em.

    Good stuff, Christine!

    1. money funk

      I know, huh? Like I would seriously need to down grade my current living conditions or figure out how to increase the cash flow. But if I really think about it… without the debt… it wouldn’t be an issue. I spend so much on paying down this debt (the monthly interest payments make me cringe).

      I know its not always easy to do such things like continuously pack a lunch. But keep going with the effort. And continuously see the big picture. I would like to retire in style. And no one is going to do that for me, but me.

  2. Investor Junkie

    If your company is matching only up to 5% of your 403b then you should at least go up to that amount. For the $16500 403b max? maybe not. Also don’t forget there are catch up contributions after age 50.

    Ideally the younger you max out, the better as you’ll have the money work for you instead of you working for your money.

    It can be said that you don’t max out your 403b, but only up to your company’s matching and then max out Roth IRA instead.

    I can’t speak for your 403b plan, but if the investment options stink (ie high fee, actively managed, etc.) you can do better with an IRA.

    Plus currently Roth IRAs are not taxed when taken out and are forced to withdraw at a higher age.

    1. money funk

      LOL. Wow, I made a whopper of a mistake. Not matching…automatically contributing 6% of my pay (I did verify this fact against my retirement account). So, I am not missing out on work giving me money as they are already contributing and I am 100% vested.

      So, if I don’t do anything, I will have $300K+ from my company in 28 years. If I decide to max then works contributions put my goal much closer in mind. πŸ˜‰

      I love having people like you around. How could I make such a blooper?

      1. Investor Junkie

        Sure anytime πŸ˜‰ I didn’t realize you included the 16500 as also including your company match. It’s not.

        Never give up “free” money from your biz or govt πŸ˜‰

  3. Evan

    Nice catch IJ.

    Money Funk – Congrats at taking this huge step to jump on top of your 403(b). Are you a teacher?

    1. money funk

      Its funny how I think I got a post of this nature all worked out and then bam! A big ‘D’oh’. Glad I am not an accountant. LOL.

      No, I work for a research hospital.

      *Now submitting increase paperwork for my 403(b)* πŸ™‚

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  8. Daddy Paul

    When you pay off your loan it is if you are saving money and getting a high rate of interest. If you have a 15% loan paying it off is the same as a 15% investment.

  9. J. Money

    LOVE love LOVE “invest your raises!” If you could do that through out life you’d be crazy well off. Not only because of the actual money you’d be investing, but the way you’d treat the rest of your financial life – the whole “living below your means” type thing. Once your spending starts leveling off, it really is that easy to stay on track and not build up that wealth. If you want to, of course πŸ˜‰

    1. money funk

      Ya, I think its a great tip. And one I did do last week. Being the money is already taxed, moving that money to be taken out before taxes… I probably won’t even notice the difference. πŸ˜‰

  10. Monevator

    The results you can get starting in your 30s are just fine. Don’t forget to factor in inflation – sometimes I do all the sums with 3% knocked off my expected rate of return as a shortcut.

    Glad you found the tinpot millionaire inspiring. So did I!

    A little, often, adds up.

    1. money funk

      I am glad to hear that, Monevator. I did think of inflation and that the potential amount will not be worth as much today. But I still think it is a pretty safe number. Plus, I lowered the rate of return to the normal 8%-10% that most people use to figure potential returns.

      I thought it was great, that story. Makes me think of this old guy with a long beard and gray hair, who rides around on his scooter. Found out he is lawyer with bookoo bucks. He totally leaves below his means.

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