How Compound Interest and Dollar Cost Averaging Reduce the Cost of Retirement
<p>Most of us know it is smart to save money for those big-ticket items we really want to buy — a new television or car or home. Yet you may not realize that probably the most expensive thing you will ever buy in your lifetime is retirement.</p>
<p>Perhaps you’ve never thought of “buying” retirement. Yet that is exactly what you do when you contribute to a 401(k) plan. You are paying today for <a href="https://www.employeefiduciary.com/blog/target-monthly-income-not-account-balance-saving-retirement" rel="noopener ugc nofollow" target="_blank">retirement income</a> tomorrow. When you consider that income may need to last 10, 20, even 30 years, it’s easy to understand why retirement is not cheap.</p>
<p>Given the cost of retirement, saving for it can seem futile — especially when you can’t afford to contribute much to a 401(k) plan today. However, two finance principles — compound interest and dollar cost averaging — can make retirement more affordable than you think.</p>
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