Retirement savings starts with first paycheck

We're coming up on Labor Day weekend and it's a time to celebrate all of the hard work you put in week in and week out. But don't forget, the goal is retirement.

There has to be some goal for laboring on for more than 40 years, but you want those years to be comfortable. You don't want to struggle in the back end.

Let's start with some retirement facts from the US Department of Labor.

  1. Retirement lasts 20 years
  2. Fewer than half of us have done the math
  3. 30 percent of workers don’t use their 401k

The bottom line is as soon as you get that first paycheck, you have to save money. No way around it.  The sooner the better said David Skid, a certified financial planner at Morgan Stanley. 

"There are graphs and charts that will show if you start when you're 25 and stop when you're 35 you ultimately end up with more than if you start at 35 and contribute for 20 or 30 years."

It's the power of compounding interest. What you need to put into that 401k can vary from person to person, but Mr. Skid says here's a rule of thumb:  Maximize your employer match. Let's say your company will match you up to $1,000 then you should contribute at least that much. If you don't, you are throwing away free money. 

And consult an expert at every phase of your life to make sure you are on the right track.

"Everybody has unique situation. The role of a financial planner isn't to say you're going to or you're not going to be OK, it's to help you realize that this set of choices might lead itself to this ultimate retirement lifestyle, or maybe by tweaking a couple of things here then it might lead to this sort of lifestyle," said David Skid, executive director at Morgan Stanley.

The US Department of Labor offers great tips on its website for financial planning.