Start Saving for Retirement

It is never too late to start saving. (You've heard that before.) But there is a cost to waiting. The older you are when you start saving, the harder it is to catch up, if you can ever catch up. And you've heard this before: Start saving for retirement with your first job.

Let me show you a chart that will help put it in perspective. First I need to set the stage. The Andrew Sisters---La Verne, Maxine, and Patty---all invested in IRAS at different times in their careers.

La Verne started out at age 25 investing $2,000 a year in a Roth IRA. She had been to one of the Every woman's Money Conferences and had heard me talk about saving for retirement. she thought she would just do it until she got married and had kids. Then she would do some real planning when her Prince Charming came along.

Well, Prince Charming never found his way to her doorstep. La Verne never married but kept contributing $2,000 annually into her IRA account. She found saving and investing seductive as her account grew, and she loved looking at her quarterly reports and checking her investments online.

Her sister, Maxine, at age 25 thought she'd to the same---just save until Prince Charming showed up. When he did, she got married. Once the kids came along, there was no extra money to put in her IRA. Then her Prince Charming, who had a roving eye, ran off with her sister Patty. As single mom, life was a struggle, but Maxine refused to withdraw the money in her IRA no matter how desperate things got.

She was really a cheapskate at heart and did not want to pay that 10 percent penalty to get at her money, and she was only able to invest those first 10 years. Over the years, she never opened any of her statements. She just let them pile up and used them as kindling to start fires in her wood-burning stove. (She was very thrifty!)

Patty had a great time paying. She could see no reason for saving when there were so many great things in life to buy. She loved her credit cards, and they loved her back. They traveled together every-where. They glitter attracted Prince Charming, who came trotting after her thinking she was wealthy. Little did he know that it was only rhinestones and not diamonds!

He helped Patty run up those cards to their max, and then he took off on his horse, Discover, when the creditors started knocking on the door. This left Patty to face the music alone. Her sister, La Verne, dragged her to an every woman's Money conference where an epiphany occurred. She struggled to get out of debt and began to save, starting at age 35.

Patty has not done as well as Maxine, who actually invested $46,000 less. But Patty is not complaining because she is pleased with her nest egg. What Maxine had going for her was time, and she was pleasantly surprised when she opened the envelop to find out much money she had. La Verne, well, she did just fine, didn't she? Now that she's a wealthy and wise old woman, she is instructing her nieces on what to do with their IRAs and what to include in a prenuptial agreement if Prince Charming should show up.