The power of money! Compound interest, future value of money, present value of money. Fresh out of college, these were terms that I quickly became familiar with when I started my banking career 43 years ago. I was 21 years old at that time, and was lucky enough to realize that these were extremely important words that would shape my financial future for the rest of my life.
In that first job at Erie County Savings Bank, I was introduced to a program called the Empire Savings Plan, whereby an employee could save up to 50% of their annual bonus to be put away for retirement savings. I immediately signed up for the program, thus beginning what would become one of the smartest decisions of my life.
This program continued for four years until 1981, at which time the IRS created the 401(k) program. I was now allowed to put away a percentage of my annual salary in pre-tax dollars for retirement. Additionally, my employer matched my contribution dollar for dollar up to 5%. It took me less than one second to realize that I was getting “free money” from my employer for my long term future!
Throughout the remainder of my career, my strategic plan was simple: every year, I would take 1% of my annual salary raise and increase my personal contribution to the 401(k) plan. In the situations where I changed jobs, I started my 401(k) contribution at each company’s match percentage (or more if I could afford to do so), and continued my personal program of using 1% of my annual raise to increase my 401(k) contribution.
It should be noted that I rolled over the existing 401(k) balance from my previous employer to investments managed by a certified financial advisor. This tactic proved to be incredibly successful for me personally, and has allowed me to retire early and enjoy these days in a fun and stress-free environment.
In my situation, I did the above for 42 years. The effects of my contributions in that period of time have made me financially set for the remainder of my life! I no longer have to work for a living, and my wife and I are living an incredibly awesome lifestyle, strictly living off of my 401(k) investments. Additionally, I am not yet collecting social security benefits, which will only further increase my spending power when I decide to exercise that option.
The message is obvious! Free money, early retirement and a stress-free lifestyle can be yours by following the plan that worked for me. Start your 401(k) investment plan today!
Tim Kwiatkowski has been a long tenured banker in Western New York, most recently serving as Vice President of Commercial Lending at Bank of Akron and just recently retiring after 42 years in the banking industry. Tim is an accomplished speaker in Western New York specializing in banking, effective networking techniques, and various other business topics. Since his retirement, Tim now functions as a Business Liaison in Western New York using his many contacts in helping businesses and individuals find solutions in reaching the next level of success in their performance.