Waiting is the most expensive option. Retirement investments need time to grow, so starting early is the key. As you will see, waiting can be very costly. The longer you wait to start saving for retirement, the more free money – as compounding returns or growth – you leave on the table. Even starting with a small amount invested regularly at a young age builds momentum. Compounding interest helps the regular contributions grow over time. If you wait, even a year, you can miss out on thousands of dollars in retirement earnings.
What a difference a year makes!
Saving $200 per month and averaging an 8% annual rate of return.
| Age you start | Value at 65 | Difference at 65 | |
|---|---|---|---|
Start investing at 25 Start investing at 26 |
$671,474.50 $619,335.64 |
$52,138.85 | |
Start investing at 35 Start investing at 36 |
$319,712.49 $293,630.08 |
$26,082.41 | |
Start investing at 45 Start investing at 46 |
$130,696.21 $118,615.01 |
$12,081.20 |
The returns are hypothetical and solely illustrative. Individuals participating in the 401(k) may experience lower or higher rates of return.
