I've discovered something over the years: If I wait until I have money to put it in my retirement account, I never do it. When I first opened an IRA (Individual Retirement Account) some 15 years ago, we barely had enough money to buy groceries. I think we started with $25 dollars a month, which seemed like a fortune, but we rapidly discovered that we could adjust our spending if it came out automatically. We raised it a little bit every year, until we were contributing the maximum amount to both IRAs every year.
Then came the fateful change. In 2007, we were looking at a challenging year. We knew that we would be moving twice within 10 months, and we were taking a big loss on a rental property. In order to remain solvent, I stopped the automatic contributions to our IRAs. "Just until we get settled," I thought. I should have known better. It has been nearly three years, and I never restarted those contributions.
Just a few minutes ago, I looked at our financial situation and thought, "We really should be contributing to our IRAs." I decided to start with just mine (as my husband is also saving in TSP) and logged into my account. I did the math ($5000 per year divided by 9 months remaining in 2010) and set it up to automatically transfer $555 each month. The number is daunting, and I wonder how we will manage, but we can always make a change if it gets too hard. From past experience, I know that we usually somehow manage to get by if the money comes out automatically.
And so, I challenge you. If you are not contributing to TSP (Thrift Savings Plan), set up a contribution today. (Even 1% will add up.) If you are already contributing to TSP, set up an IRA, and put something in it automatically. Chances are, you can manage the change, and you will be amazed at how the money adds up.
Kate Kashman is a military spouse, personal finance junkie, and author of The Paycheck Chronicles blog at Military.com. She has four usually lovely daughters, two cats, and one husband. To read more from Kate at The Paycheck Chronicles, click here.