The 10-1-NOW Rule
"How much should I invest each year?" The 10–1–NOW is a simple rule of thumb: You must invest 10% of your pay in your Paycheck Manufacturing Company to generate paychecks for life. Why 10-1-NOW? If you can’t save the full 10% now, increase your contribution to your Paycheck Manufacturing Company by 1% of your earnings each year until you get to 10%. "10-1-NOW" Should be your life-time savings mantra.
If your company 401(k) plan offers an automatic escalation option, this is your ticket to successfully executing your 10-1-NOW Mantra. Sign up today to automatically have your contributions increased each year by 1% until you get to 10%!!
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See for yourself how, with compound interest, increasing your investment in your Paycheck Manufacturing Company by just 1% a year makes an enormous difference.
The 10-1-Now Rule in Action
Base salary assumes $40,000 per year. Average rate of return assumes 6% per year. Average salary increase assumes 0% per year. All calculations are based on hypothetical returns and other factors which can change over time. Any changes will greatly impact your actual results. No guarantees are proved by the author, 401k Coach, LLC or any of its affiliates. Consult with your actual financial advisor or tax consultant before taking action.