Picture this – you’re 25 years old and your primary focus is saving for retirement forty years down the road. Let’s be serious. Saturday night plans might grab your attention but ensuring you have enough money to enjoy your golden years is likely far down your list of priorities. However, channeling some of that youthful energy could go a long way towards ensuring your reach your long-term goals.
To illustrate this point someone age 25 would need to save approximately $5,000 per year in order to have $1,000,000 for retirement at age 65. Delaying that start of savings until 35 would require more than $10,000 in annual savings to achieve the same goal. At age 45, you would need to save over $24,000 per year and at age 55, would need to save over $72,000 per year in order to reach $1,000,000 for retirement at age 65. The below graphic will help illustrate this point.
Another way to look at this is how much would be available at age 65 assuming you begin saving $5,000 per year starting at age 25. The below graphic will show that by starting to save at age 25 you will have approximately $1,000,000 available at age 65. This would be over 2 times what someone would have if they start saving at age 35 and almost 5 times what someone would have if they start saving at age 45. Thus, the first ten years of saving $5,000 annually brings over $500,000 to your retirement coffer.
The fact of the matter is that starting to save for any financial goal early (and not just retirement) will pay off in the long run. The years and years of contributions and earnings on those contributions certainly add up!