Follow @jack_ganssle

The logo for The Embedded Muse For novel ideas about building embedded systems (both hardware and firmware), join the 25,000+ engineers who subscribe to The Embedded Muse, a free biweekly newsletter. The Muse has no hype, no vendor PR. It takes just a few seconds (just enter your email, which is shared with absolutely no one) to subscribe.

By Jack Ganssle

Stashing it Away

Published 8/23/2005

You can't take it with you.

But you're surely going to need a lot of it before long.

"It" is money, of course. The grease of business, the stuff that puts food in your kids' mouths, pays for their education and your mortgage.

My parent's generation, the so-called "Greatest Generation," grew up through the Depression. They hoarded cash and assets for retirement; even in their 30s the distant golden years always carried much mindshare.

My generation was, and is, a bit more sanguine about retirement. We tend to assume things will work out somehow. Some did salt the dough away even from an early age; others started to panic in their 40s and 50s.

Younger folks seem even less concerned about stashing bucks into investments. Satisfying goodie lust consumes much of the paycheck so there's little to save. I do think the younger generation has more expenses than ever. Many 20- and 30-something engineers carry significant college debt. The University of Maryland during my heyday cost a mere $400/semester, a sum that one could reasonably earn with a part-time job. I had no loans after school in those easier times.

One of the great surprises of life is the invitation to join AARP (the American Association of Retired People) that arrives via the snailmail a week after your 50th birthday. My wife surreptitiously signed me up, and I hate to admit that I do peruse the magazine now and then. This month an article ("Start Late, Retire Rich") describes an approach to building up a nest egg in middle-age. Correspondent Harriet is 52 and hasn't saved a penny, yet if she and her husband put just $10 per day each into a mutual fund, perhaps by cutting out the venti Frappunccino and breakfast pastries, they'd have almost $300k by age 70.

$300k isn't going to pay for many years of retirement, and a single expensive illness could make poor Harriet and her husband destitute. It's hard to see how Social Security will ever cover more than a fraction of living expenses.

My advice to young engineers is to stash some money away, every month, without fail. Stuff just $2000 a year, or $167/month in an 8% investment and you'll be worth over a half million at retirement. If you're careful with debt, especially credit cards and home equity loans, you'll eventually pay off the house and have that significant asset as well.

Want to be a millionaire? Put $300/month away and 40 years later you'll be a mini-Gates.

Compound interest, if exploited early in one's career, is a magical power. That $300/month would be worth only $144k in 40 years at 0%.

But the trick is to start early. Make a commitment to pay yourself first.

There will always be a swath of bills in the mailbox and dozens of waving hands demanding a cut of your salary. Who is more important to you - the electric company or your future? 500 channels of cable TV or many years of true leisure.

Only you can decide.

What do you think? How's your retirement savings going?