Retirement planning is essential to adulting, but it’s a slow grind for most people. Achieving a wealthy retirement requires decades of dedication, hard work, and discipline unless you’ve got your name in a rich relative’s will. It’s worth it, though. Having a large nest egg can bring you peace of mind, and even give you the chance to set up your descendants with generational wealth.

I’m not here to tell you it’s easy. Most good things in life aren’t. However, I can share one simple trick to help you grow your net worth exponentially throughout your working life. Make this simple tweak to your personal habits, and your future self will thank you.

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How most people fall behind the curve in retirement planning

There isn’t an instruction manual for navigating adult life. Everyone is thrust into a complex world, embarking on a unique journey based on their education, goals, upbringing, and plain old luck (good or bad).

Most of us learn early just how darn busy life can be. There’s always something pressing going on. It might be a career, starting a family, or fixing up the house you just bought. Then, additional obligations crop up. Went to college? You might have student loans. You may want a nicer vehicle as you move up in your job. You work hard, so you take vacations to reward yourself. (For myself, I’m finding out firsthand how expensive raising kids is.)

With so many more immediate concerns drawing your attention, retirement can feel far away, so people tend to put it on the back burner. Unfortunately, it often stays there too long.

According to the Federal Reserve Board’s 2022 Survey of Consumer Finances, in households headed by someone 65 to 74, the median retirement savings was just $200,000. Financial experts such as those at Fidelity suggest that a typical American should aim to have 10 times their annual salary socked away by 67. Based on 2023’s median household income of $80,610, that means that in an ideal world, the median retirement savings figure would be closer to $800,000.

In short, most people aren’t retiring with anywhere near enough money for the golden years that they’d prefer.

This simple trick is a game-changer

The trap many people fall into is that they pay everyone else first and themselves last. By the time you pay all your bills and live your life, there’s nothing left to save.

Instead, consider paying yourself first, and live the lifestyle you can on what’s left over. That means putting some money away for the future from every paycheck before doing anything else. That strategy applies within reason, of course. If you’re struggling to afford food or shelter, you have more important things to deal with first.

Yet, we live in a world where every company and brand is vying hard for your money. Consumer spending drives approximately 68% of the U.S. economy today. Under these conditions, it’s easy for lifestyle inflation to creep in. All those little subscriptions and purchases add up, so it’s easy to think you can’t afford to put money away.

Pay yourself first so you don’t wind up in this position.

Look at how much of a difference it could make

I’m not telling you not to enjoy life. In reality, if you consistently invest relatively small amounts of money, your portfolio can grow into a significant nest egg over time.

Suppose your portfolio grows by an average of 10% annually, which is roughly the average annualized return that S&P 500 index funds have delivered over the long haul. Here is about how much you would wind up with at 65 by investing just $50 every month, depending on how old you are when you start:

Calculations by author.

A person just starting out in their working life who chooses to consistently invest just this much will likely retire with over twice as much as the typical American — even if they don’t increase the amount they contribute over time. The dramatic drop-off in the final totals as you delay the point at which you begin to save for retirement illustrates just how much you give up when you pay yourself last.

Don’t get discouraged if you’re reading this as an older person who is behind the curve on your financial plan. You can’t defeat math, but you can somewhat compensate for lost time by increasing your savings rate. The bottom line? Start paying yourself first, no matter your age or where you are in your life journey. It can make a real difference in your finances later in life.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

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