About Letort Trust

LeTort Trust is an Independent Trust Company with a single focus of providing personalized financial solutions to individuals, businesses and institutions. As an Independent Trust Company, we are held to the highest standards of fiduciary accountability in the industry. Our clients depend on the prudence and expert guidance we provide through our customized wealth management and retirement plan services.


What Everyone in Their 20s Should Know About Saving for Retirement?

Anyone in retirement will likely tell you how quickly it seemed that they reached retirement age. They might also tell you how they wished they had started to prepare for it sooner.  We all know that it is better to start saving when you are young. The earlier you start saving, the more time your money has to take advantage of the Power of Compounding. There is no better, more efficient way to start saving for retirement than by taking advantage of your company sponsored 401(k) plan. So it makes sense for those in their 20s, the Millennial Generation, to jump at the opportunity to take control of their financial futures. After all, they have the greatest asset on their side… time.  So why aren’t they doing it?

*Statistics have shown that roughly 41% of workers in their 20s have participated in their 401(k) plan. That is the lowest participation rate of any age group and yet, that is the age group that can have the greatest impact on their future wealth by participating in their plans.

In addition to low participation rates, those who are enrolled in their 401(k) plans are often times using them like short-term savings accounts, rather than long-term investments for their future. The attached article shows the alarming rate at which withdrawals have been taken from existing 401(k) accounts. According to a study done by Fidelity Investments, nearly 40% of workers between the ages of 20 and 39 are cashing out of their 401(k) plan when they change jobs. Perhaps they feel that their small balances are not enough to make a difference or maybe they just want the cash. However, many do not realize that taking money out early, subjects them to penalties and taxes, leaving them with a much smaller balance to cash out. But the real impact is from the longer term tax-deferred investment that is lost.

The chart below represents two scenarios, showing how even a small balance of $10,000 left in a 401(k) can make a big difference over time.


Money Kept in 401k



Money Taken Out of 401k


$10,000 Initial Balance in 401(k)



$10,000 Initial Balance in 401(k)


Kept in account for 40 year, assuming

a 6% annual rate of return



-$1,000 Penalty for early withdrawal



-$2,500 Taxes based on 25% tax bracket



$102,857  Ending Balance


$6,500 Ending Balance

( Possibly less if state taxes and penalties apply)

Studies have shown that The Millennial Generation of younger workers is not expecting Social Security or traditional corporate pensions to provide for their retirement.  They have seen their parents’ lack of retirement readiness force them to work longer in their careers. Yet, even armed with this knowledge, many in the Millennial Generation have yet to take the steps necessary to prepare themselves for retirement.  They can start today, by signing up for their 401(k), possibly one of the most important financial decisions they will make in their lifetime. In addition to starting to save early for retirement through a 401(k) plan, there are other steps that younger workers can take to secure their financial future. Since time is on their side, taking advantage of some simple steps now can make a big difference down the road. For additional steps toward financial independence read:  Retirement Planning for 20-Somethings

*Source: Vanguard Institutional Investor Group (2011)