Don’t Forget to Plant Your Money Trees

October 23, 2019

It’s fall, and that means harvest time. In the United States, we grow a lot of food. More than 10 billion pounds of apples this year. And in Colorado alone, we grew 29 million pounds of peaches last year.

Whether you manage 1,000 acres, a few tomato plants in your backyard, or a succulent on your bedside table, the formula for growing plants is the same. You plant a seed. You care for it. And then, you wait.

That’s the analogy that NAGDCA uses in their short, fun YouTube videos about investing. NAGDCA stands for National Association of Government Defined Contribution Administrators—in other words, the people who administer things like the PERAPlus 401(k) or 457 accounts that you might have in addition to your PERA Defined Benefit plan. We’re mentioning NAGDCA because every year they host National Retirement Security Week, and this year we’re celebrating from October 20–26.

Having a steady stream of income in the form of a pension is awesome, but there are plenty of reasons why you might want more: More money to spend in retirement, the ability to retire earlier, or to make up the difference if you don’t spend an entire career in a pension system. But many people aren’t sure how to get started with investing, so they put it off. That’s kind of like planting seeds in July instead of May. Now, while sometimes it might be too late to plant a seed, it’s never too late to save. If you plant seeds late, you might need to add fertilizer to help the plant catch up. If you start investing later, you might need to add more of your own money.

So what does that look like in numbers? Let’s say you can save $75 per month (less than $1,000 per year) starting when you’re 25. You bump up that number 2% each year (that’s only $1.50 more per month in year two). You do that every year until you retire at 65. If your investments return 6.5% on average, you’ll retire with $217,431. If you start when you’re 40, you can still retire with that amount, but you’ll need to contribute about $240 every month to get there—more than three times as much every month.

So, enjoy autumn. Maybe enjoy something you’ve grown yourself. Or maybe you’re just enjoying apple cider and pumpkin-flavored things. But also think about the seeds you’re planting for yourself in retirement (if you haven’t started yet, start today). And give them time to grow. The more the better!