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If I Could Go Back in Time, Here's One Financial Mistake I Wouldn't Repeat


When I first graduated from college, I had a few goals — pay off my educational debt, build an emergency fund, and save up some money for travel (something I didn’t do very much of as a cash-strapped student). Thankfully, a combination of a good job right out of college and living at home for a period (and therefore not having to pay rent) helped me achieve those goals.

But there was one financial objective I overlooked during my early 20s — funding a retirement account. And as a result, I cost myself a lot of money. I just didn’t realize it at the time.

A mistake I wish I could correct

I didn’t start funding a retirement plan consistently until I was about 25. But I could’ve started contributing to one three years earlier.

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When I first started working, I didn’t have access to a 401(k) plan through my job. But an IRA was always an option. It was just an option I decided not to take. And to be fair, I got access to a 401(k) shortly thereafter.

My logic was that retirement was really far off, so I had plenty of time to build up savings for it throughout my career. Plus, I wanted to shed my debt and put some money in the bank.

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Now to be fair, my decision to focus on building an emergency fund was hardly a silly one. A good 63% of Americans today can’t afford an unplanned $500 expense, according to SecureSave data. I didn’t want to be in that position, so I prioritized near-term savings over long-term savings, which made sense.

But what I should’ve done was simultaneously focus on putting at least some money into a retirement account. Losing out on three years of contributions means I’m a lot less set for retirement than I could be.

What I missed out on

You may be thinking “What the big deal? So you waited a few years to fund your retirement account — how much money could you really have missed out on?” But the answer is, quite a lot.

See, when you invest your retirement savings in stocks, you have the potential to grow a small sum of money into a much larger one. The stock market’s average annual return over the past 50 years has been 10%.

So, let’s say I’d contributed $5,000 to a retirement plan 20 years ago. At that same return, that $5,000 would be worth close to $34,000. So the way I see it, failing to take action in that regard potentially cost me $29,000. That’s a lot of money.

Of course, I was able to course-correct pretty early on and start funding a retirement plan in my mid-20s. And I’ve pretty consistently contributed to one ever since. But still, if I could somehow go back in time, I’d tell myself to start saving for retirement right away. And you may want to tell yourself the same thing. It’s a smart thing to do for your personal finances, even though it may seem unnecessary when you’re young and retirement is so far away.

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