My dad retired comfortably at 54 with a simple savings rule

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, such as American Express, but our reports and recommendations are always independent and objective.

• My dad encouraged me to start saving for retirement as soon as possible, so when I got my first job I contributed to my 401 (k) and opened a Roth IRA.
• After graduating from graduate school, I continued to invest 10% of my salary in my employer-sponsored pension plan, even though that meant I continued to live like a broke student.
• My dad was proof that the strategy works: when he had to retire at age 54 due to a terminal illness, he had $ 750,000 in his retirement accounts – more than enough to take advantage of his retirement. life and travel for several years.
• For me, saving early allowed me to take time to raise my children – I wasn’t afraid of falling behind in retirement.
• Visit Vanguard Personal Advisor Services® for the investment advice you need to help you build the life you want ”

Growing up, my father always gave financial advice and services to those in need. He was an accountant at a large retail company, but he also helped people file their own individual returns each year during tax season. As I got older, my dad also started giving me financial advice, and his most urgent advice was to start investing for retirement as soon as I could.

My dad encouraged me to invest diligently right after college, and he was proof that the strategy works. He retired early at age 54 with $ 750,000 in his retirement accounts after saving early in his career.

Save for retirement immediately after college

When I graduated, he encouraged me to put 10% of my salary into the employer pension fund that was offered to me at my first job. I also opened a Roth IRA with Fidelity to save on my own.

It was relatively easy to set up the Roth IRA online, and I decided to invest in a target date fund because I knew very little about investing at the time and wanted a strategy ” set it and forget ”for my Roth IRA.

While I didn’t initially see the importance of starting to invest so aggressively so early on, I started to see the big picture when I learned how compound interest works.

Building my retirement savings after graduation

After graduation, I took a job as a high school business education teacher. I decided to invest 10% of my salary in my 403 (b) once I was eligible, again thanks to my father’s advice.

He told me that it is always easier to save and adjust the amount in your life than to try and save later when you are already living a certain lifestyle. I was earning a good salary as a teacher, but I still lived like a broke student, saving me 10% without wondering if I was going to be able to afford it.

The benefits of saving for retirement when you’re young

My dad ended up retiring earlier than expected due to a terminal illness, but when he retired at age 54 he had about $ 750,000 in his retirement accounts. He used some of that money to take my two brothers on a trip through Europe for a few months, along with many other trips and experiences he was able to enjoy before he died years later.

There are many advantages to starting to invest early. For one thing, I saved enough money in my Roth IRA when I wanted to buy a home to take 10% off without paying any additional taxes or fees. Also, once I left the workforce to stay home with our two children, I felt good about the amount of money I had already saved and wasn’t afraid to miss out on a few years. without investing in a workplace pension plan. My husband and I are hoping to pay off our mortgage and retire early, and are currently in the process of maximizing his 401 (k) and contributing to our two Roth IRAs.

Both of my parents have passed on a lot of valuable information about investing and personal finance over the years. They had their own financial challenges to overcome, but I am grateful for the opportunities and wisdom they gave me. My mission is to be able to pass on the financial wisdom they gave me as well as the knowledge my husband and I gained along the way to our own children.

While I agree that it’s important to start investing as early and as often as possible, I think it’s even more important to figure out how you can make investing work for you. If you want to retire before the normal retirement age of 66, you will most likely need to invest more than 10% of your salary in your employer-sponsored pension plan.