Why People Fail at Flossing and 401ks

Twice a year I look at the dentist and tell her that I floss. She knows I don’t floss. And I know she knows, I don’t floss. But I stare at her anyway and tell her that I, do indeed, floss.

You see, the dentist and I have this mutual understanding. She knows that I know it’s good for me, I know I should do it, and the plain and simple truth is that it will never happen. She doesn’t press the issue or call me out, she just nods.

So this begs the question, if after knowing all the benefits, why don’t I floss?

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401k Heads to the Gym

It seems weekly that my wife asks me when I’m going to start working out again. I usually have the same old answer, “Soon.” I can assure you that answer won’t suffice for much longer.

Unfortunately the same response can be found for many hard working Americans out there regarding their 401k, “Hey, when are you going to start saving?”


If you think about it, your 401k is a lot like working out. Every day you tell yourself one of the following (or all three):

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100 Million Problems

According to the 2010 US Census there are now approximately 170 million people in this country between the ages of 25 and 66. By some estimates, only 51 million of these people are participating in an employer sponsored retirement plan (401k, 403b, or similar) and making 401k contributions.

So what the heck are the other 120 million working adults in this country doing to save for retirement!?!

Is it really true that roughly 7 out of 10 of us are not saving for our eventual retirement? Say it ain’t so! I realize that a small segment of these folks will receive a monthly pension upon retirement (teachers, firefighters, police officers, utility workers, etc). My guess is if you had a room full of your friends and you asked them to raise their hand if they are eligible for a monthly pension check upon their retirement, fewer than 10% would raise their hand.

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I Love Dollar Cost Averaging!

Actually I love anything that gives my investment portfolio a legitimate edge. There is beauty in the simple and dollar cost averaging (DCA), or systematically investing into your 401k for example, is elegantly simple.

Actually, if you are contributing to a 401k/403b or similar there is a good chance you are already enjoying the investment benefits of DCA. Let’s examine why this is benefiting you.

At some point in the past, you (hopefully) filled out a form electing to contribute a certain amount of your hard earned paycheck directly into your employer’s retirement account. (For the sake of this article, let’s assume you are contributing to a 401k.) Generally, you elect to contribute a flat dollar amount or a specific percentage of your paycheck to your 401k. Let’s assume that you are paid every two weeks, 26 times per year. Let’s also assume that you elected to contribute $200 per paycheck to your 401k ($5,200 per year). To keep things simple we will also assume that you opted to put your $200 contributions into a S&P 500 Index Mutual Fund, a broad representation of large US companies.

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