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Save More Tomorrow - Research, not to mention personal experience, indicates folks are usually better at procrastinating than making proactive decisions right away. A relatively new concept, TED Talk, and book on this theme, Save More Tomorrow, takes advantage of this fact of human nature and suggests how we can be generous to our future selves. Basically, the idea is, though we think we cannot afford to save and invest now, how about later, once we have had promotions or pay increases? So this involves putting the legal pre-planning in place to assign some or all of our future enhanced earnings and bonuses to tax-deferred savings/investing accounts. A quick search engine query on the title will bring up a PDF that can be downloaded immediately, talks we can listen to on the topic, books others can give us for Christmas, and related calculators one may use. Studies have shown that people who assign future wage increases toward tax-deferred investing successfully save and invest as much as 55% more than those who do not. How much difference can that make? To keep things simple, here is a straightforward example: even if with no matching funds from the employer, a person who begins saving and investing in a 401k or self-employment IRA with $5000 per year at age 25, earns just a market average of 10% annually, takes no distributions, and reinvests capital gains and dividends will have $2,212,963 about when it may be time to retire, forty years later. Another person who has used the Save More Tomorrow approach and invests 55% more ($7750 a year) but otherwise has the same history will have $3,430,092 forty years later, well over a million dollars more.
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