I'm sure I'm not the first person to break the news to you that, in general, Americans are vastly under-saved for retirement.1 Factors such as low interest rates, high student debt, unemployment and inflation make it difficult for Millennials and Boomers alike to put money aside for the future.

Compounding the problem is the fact that Americans also need more money than ever to be able to retire comfortably. According to a recent report, the average U.S. retiree would need one million dollars to maintain their current lifestyle in retirement.2 While this figure may seem daunting, quite a few Americans retire each year with enough income to sustain them throughout the rest of their lives, many of whom are not members of the elite or super-rich.

So, is it even possible for an average investor to accumulate enough money to retire comfortably? Yes. Is it easy? Of course not.

"So, is it even possible for an average investor to accumulate enough money to retire comfortably? Yes. Is it easy? Of course not."

What makes investing for retirement so difficult is that simply saving money by putting it aside is generally not enough. You can brew your coffee at home, carpool to work and clip coupons, but every day costcutting probably won't be enough to grow your bank account to the level it needs to be at in order to support yourself (and your family, if applicable) when you stop working.

However, a commitment to saving in-line with a disciplined investing strategy over time may provide you with the combination you need to reach your goals.

In my opinion, disciplined investing is about three primary commitments:

  1. Making investing a habit
  2. Understanding the principle of dollar cost averaging
  3. Looking at a longer investment horizon

In this article, I will explain how, even with the unpredictable dips of the market, purchasing investments over the long-term may still help you grow your assets over time. I also will attempt to bust the common myth that you have to shift assets from one investment vehicle to another in order to become a successful investor. Instead, I make the case that putting your money "out of sight, out of mind" can actually be your advantage. Finally, we'll talk about the importance of resisting the temptation to "beat the market" (and I'm doubtful anyone consistently could). I personally believe that investing success is less about the specific investments you purchase and more about staying invested throughout fluctuating market cycles.

Investing is Like Flossing: Make it Habit

How long did your alma mater wait after you graduated to start soliciting for donations to the alumni fund? The fundraising committee probably didn't waste too much time. There's a reason colleges and universities will often call on their graduates for donations before many of their alumni have even been able to secure a job: they want you to get in the habit of regularly donating. If you're already in the habit of donating $5 each month to the scholarship fund, then the hope is that your donation will increase in proportion to your paycheck as you move up the career ladder. It's the frequency that matters, not the overall amount.

In my opinion, successfully investing for retirement follows the same idea. Part of being a disciplined investor is making the decision to regularly contribute money to your retirement account. Even if you think you have trouble sticking to a budget, you're probably better prepared to put a specific amount of money away each month than you think.

Consider the variety of automatic payments in your life that you may even have forgotten about. Could you tell me, off the top of your head, how much you pay for Internet access each month? What about your favorite magazine subscriptions? Or are you still paying for the gym membership you signed up for in January? These are examples of expenses that are often withdrawn from accounts without a second thought. Your month-to-month spending isn't impacted every time your cable company takes out a payment because you've become accustomed to living without those few extra dollars.

Once you decide how much you are going to save each month, commit to it. Learn to pay yourself first, and then live on what's left. If you've budgeted appropriately for your personal needs, you should be able to put away the same amount each month without significantly altering your lifestyle. Perhaps it means eating out one night less per week, or waiting to upgrade your set of golf clubs. This is where the real discipline comes in. Only you can hold yourself accountable to working toward your financial goals.

"Only you can hold yourself accountable to working toward your financial goals."

To help you make investing a habit, you could consider taking advantage of the variety of tools available to put away your retirement savings before you even know it's there. Many companies have programs that allow employees to automatically debit 401(k) contributions from their paycheck, or you may be able to set up automatic deposits into an outside savings account. Additionally, your employer may offer a 401(k) match up to a certain percentage of your paycheck. Just like your monthly bills, if you automate your retirement savings, you may find it's easier to live without that extra money than you thought.

A recent study by Fidelity shows the potential impact disciplined investing in a retirement account may have for the financial future of Americans. According to the company's analysis of 13 million accounts, the average quarterly 401(k) balance is at a record high of $91,000, an increase of almost 13 percent over 2013. While the market's current performance is credited with a big portion of the increase (77 percent to be exact), Fidelity attributed 23 percent to increased employee and employer contributions.3 These retirement accounts likely couldn't have grown at the same rate if employees hadn't committed to participating in their company's plan.

To further drive home the potential value of defined contribution plans, just look at the example of Ray Hinchliffe, Jr., who was recently featured on Yahoo! Finance as an "Average Joe" who retired a millionaire. Hinchliffe started his career as a grocery store clerk bringing home just $67 per week, an income that grew to more than $100,000 per year by the time he retired from being a store manager more than a decade ago.

According to Hinchliffe, the "easiest" way to save money was to participate in his employer's retirement plan. He says disciplined investing, in addition to his company's match, helped him to accumulate enough income to retire comfortably.4

Hinchliffe isn't an outlier. Another Fidelity study surveyed 1,000 people with more than $1 million in their 401(k) account, all with annual income less than $150,000 per year. These investors were an average of 59-years-old, and they contributed an average of 14 percent of their income to their 401(k)... talk about discipline! When Fidelity asked these "401(k) Millionaires" about their savings strategies, just like Hinchliffe, their advice was similarly simple: start early, take advantage of a company match, and remain invested.5

None of the people in the above success stories saved enough money to fund their retirement overnight. I'm sure there were times when a bull market may have tempted them to sell off their portfolio for an easy profit. With the fluctuations in the market, how can one tell if they are still on the right track to achieve their retirement savings goals? While it's difficult to know for sure, one measurement to look at is the dollar cost average.

Dollar Cost Averaging*

The dollar cost average of a portfolio is the average price paid per share over a period of time. Although some may think the goal of investing is to "buy low and sell high," as I said before, it is nearly impossible to time the market to achieve consistent results. Many investors see better outcomes by continuing to purchase stocks throughout high and low markets and taking into account the average price paid per share, as opposed to purchasing sporadically when they thought the time was right.

For example, let's say I decided to purchase $1,000 worth of stocks in XYZ Fund for four months, regardless of the fund's performance. My purchasing pattern may end up looking something like this:

This chart is hypothetical and for illustrative purposes only. The hypothetical statistic shown in this chart are not guaranteed and should not be viewed as indicative of the past or future performance of any particular investment..

By consistently investing over a period of time, by the end of four months I would have purchased approximately 83 shares at an average price of $48 each and my portfolio would be worth almost $8,300.

In comparison, let's say I only invested when the market seemed to be performing strong, but held off while it was in decline. In the first month I would have spent $975 for 13 shares. While stocks were on the decline in the next two months, I simply pocketed the money. In the final month, when stocks increased in value to $100 per share, my portfolio would be worth $1300. Add in the $2000 I set aside rather than invest (for simplicity's sake, let's assume I placed it in an account that did not accrue interest), plus a final $1,000 of new investments I made in the fourth month now that stocks were once again on the rise, and over the four months I would have accumulated 23 stocks valued at $4300. I would have saved $4,000 less than if I had continued to invest throughout periods of decline, and my dollar cost average would be $85.

Dollar cost averaging shows that growing your portfolio isn't just about having the most valuable stocks: it's about having more of the most valuable stocks. A cost effective way to achieve this is to gradually accumulate shares over time.

Another advantage to consistently investing over time is that fact that money deposited into a retirement account is often pre-tax money. Your returns will grow based on the value of a full dollar, whereas when investing with money that has already been taxed, your returns could potentially be growing based on only $0.80 per dollar or less (depending on which tax bracket you are in).

It's important to note that the pendulum swings both ways. Your shares could have started out at $100 per share and decreased to $25 per share at the end of four months. This is why it is often beneficial for investors to work with an advisor who can help them select investment and savings strategies that can help set them on track to reach their personal financial goals.

Look at the Longer Market Timeline

You may have heard a reporter say that the Dow is "up" or "down" a certain number of points. They're talking about the Dow Jones Industrial Average, a widely accepted measure of how the overall stock market is performing. The Dow measures the weighted average value of 30 significant stocks and their collective gains or losses are used as an indicator of how the market performed over a certain period of time.

In the wake of the financial crisis, which saw the Dow Jones Industrial Average fall a shocking 50 plus percent in just over a year, the stock market may seem like an intimidating place.6 I don't blame you for being wary of placing your money into an investment vehicle with no guaranteed returns, nor any protection for your capital. Understanding these risks is of vital importance to anyone investing in products or strategies that include exposure to the financial markets.

However, if your goal is to steadily grow your assets over time, investing in the stock market may provide an opportunity to increase your assets with higher returns than you would see saving money under your mattress. Let me explain the importance of looking at market performance over a long period of time instead of focusing on current trends.

In February of 1985, the Dow was valued at 1,284.01 points. Ten years later, the Dow was valued at 4,011.05 points, reaching 10,766.23 points by February 2005. By February 2014, the Dow reached 16,321.71 points, and by February 2017 the Dow reached an even higher 20,812.24 points.7 Just looking at these historical numbers, it would appear that the stock market continuously increases in value. 

This is not necessarily the case. As you've seen in recent years, the stock market's performance has had significant fluctations in value over time. Let's look closer.

In August of 1987, the Dow had already increased in value to 2,596.28 points. But by November of the same year, the value dropped all the way back to 1,833.55 points. Similarly, the Dow was valued at 13,930.01 points in September of 2007, which must have made the sharp drop to 7,062.93 in February 2009, the lowest point of the crisis, particularly difficult for market watchers to digest.7

What if investors at the time decided to call it quits before they thought things could get worse? Even at the low point of the financial crisis, the Dow was still worth significantly more than in 1985. And just a few years after the crisis, the stock market hit a record high of 20,812.24 points in February 2017.7

As this example shows, while the market can appear to be volatile when looking at the current environment, over time, the Dow has historically trended upward. I believe it's important to keep emotions out of your finances. The market is so unpredictable that upward and downward trends today may not be around tomorrow, but the impact of decisions you make today very well may be. This is why partnering with an advisor can be valuable. A financial professional can help you form an idea of how your current decisions may impact your future.

"I believe it's important to keep emotions out of your finances. The market is so unpredictable that upward and downward trends today may not be around tomorrow, but the impact of decisions you make today very well may be. This is why partnering with an advisor can be valuable. A financial professional can help you form an idea of how your current decisions may impact your future."

What if You Invested the Same Way You Pay The Mortgage?

As we've discussed, the market can move in all sorts of directions. During my 30-year career in finance, I've seen bull markets, bear markets, volatile markets and every adjective in between. But when looked at over the period of a long-term investment horizon, the market has tended to move in an upward direction (though I'm compelled to remind you that one cannot predict the future based on past trends).

If you're invested to achieve a long-term goal, then I would argue that making rash decisions based on fear and impulse can do more harm than good. I know that when the market goes down there's a tendency to run to safety. But all financial products come with their own unique risks. I would argue that part of being a disciplined investor is remaining invested for the long term. This might not always be in the same product, but it's important to look at the part time plays in accumulating assets.

Let's look at the example of home ownership. For many people, their house is their most valuable asset. They make monthly payments on the mortgage for years, even if they occassionally have to forgo a small luxury. If their home depreciates in value, they don't automatically move to the next up and coming neighborhood. Similarly, just because their home increases in value doesn't mean they sell for a profit.

Many people purchase a house when they plan to stay put for a while. If you are a homeowner, think about how often you look up the overall property value. It's likely you revisit the subject infrequently, perhaps only once a year when looking over your assets with an advisor.

I would say that a disciplined investor portfolio operates much the same way. Disciplined investors continually put money into their accounts over a long period of time, despite market performance, and they aren't quick to sell. Remember, accumulating assets to retire often takes decades of careful planning, consistent investing and patience.

Don't Stop Here

If I've inspired you to take a more disciplined approach to your current investments, I hope you will seek the advice of a financial professional who can help you tailor these concepts to your unique situation. Also, I encourage you to peruse the resources available here at the Financial Freedom Studio, and to discuss those resources with a financial consultant. After all, accumulating wealth is not a sprint, it's a marathon (or maybe even an Ironman), and even the most disciplined athletes will tell you that a good coach can be the key to success.


1 Morrisey, M. (March 3, 2016). Economic Policy Institute. "The State of American Retirement: How 401(k)s have failed most American workers."

2 Epperson, S. (June 2014). CNBC. "Million-Dollar Question: How Much Do You Need to Retire?"

3 Fidelity. (July 2014). "Fidelity's Analysis of 13 Million 401(k) Accounts: Q2 2014."

4 Santichen, K. (June 2014). "How These Average Joes Retired Millionaires."

5 Fidelity. (January 2014). "Five Habits of 401(k) Millionaires."

6 Amadeo, K. (2014). About.com. "Dow Jones Closing History."

7 Yahoo! Finance. (2017). "Dow Jones Industrial Average."


*Dollar cost averaging does not assure a profit or protect against loss in a declining market. It involves investing regardless of fluctuating price levels. You should consider your financial ability to continue investing through periods of fluctuating market conditions.

Past performance is no guarantee of future results.

Investing involves risk, including possible loss of principal.

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.

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