June 2016
Blueberry picking and growing your 401k
I recently went blueberry picking with my children. It was a hot sunny morning when we arrived at the farm. Fortunately, there were several empty rows of lush green blueberry bushes for us to explore with our large empty baskets. The girls worked on picking the blueberries on the lower branches while I worked on the top. After a few minutes of picking, I looked down at my basket and was dismayed to only see a few berries rolling around the bottom. Did I mention it was extraordinarily warm outside and I’m six months pregnant?
The girls were having a great time and making up songs about picking blueberries—they were also in the middle of the bushes with lots of shade. OK, Lynn Anne, I told myself—keep picking for a little longer, slow and steady wins the race, then we will have fresh blueberries for days. I moved on to the next bush which was full of ripe berries. I discovered the further down the row we went, the better the pickings, and the more fun it was to add to the growing pile.
I am probably the only person thinking about my 401k while picking blueberries—but the similarities between putting one small berry in the basket at a time and putting a few dollars in a 401(k) each pay period are striking. I was 28 when I first had access to a job with a 401(k) and company match. I started off adding 15% of my small income into the account. After a few years, it was discouraging to see the inconsequential balance but I kept adding money. I changed jobs, rolled the old 401(k) into an IRA, and started a new 401(k) with the new company. The match wasn’t quite so generous, but I continued to add 15% of my income to the account. Eventually, I could look at the balance and see progress. Is it enough to retire now? No but it will be eventually. However—each and every contribution adds up over time—as long as the contributions keep coming in. My retirement account balance has been through two major bear markets and a year-long hiatus from contributions when I became self-employed and started Gillen Wealth Management, LLC. Through these obstacles, it has grown and will continue to grow through contributions and decent investments.
As a financial planner, I have the benefit of working with many people approaching retirement. Most have accumulated a lovely sized nest egg in their retirement accounts—however, it didn’t happen overnight—but a few dollars at a time set aside from each paycheck. It’s vital to contribute through good markets, bad markets, management changes, job changes etc.
While we were picking the last of the blueberries to take home, I thought of how you have to weather the storm financially, as well as in everyday things, such as the tedium of berry picking. Soon enough, all our baskets had a generous amount of blueberries. After an hour, we had picked five pounds of delicious fruit. Back in our cool air conditioned house I’m dreaming of blueberry muffins, blueberry popsicles, blueberries in my salad… Also thinking about increasing my contribution rate into the 401k to fill up the basket faster.
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