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Save for Retirement Now!
Saving for retirement
isn't like starving yourself on bread and water for forty
years so you can binge non-stop later. It's more like eating
light (you know good-for-you-stuff like pasta, veggies, fruit
and chicken) instead of devouring steak, gravy, and chocolate
cake every day.
The retirement math speaks
for itself. For example, at an 8% annual rate of return, you
can expect:
|
Starting
age
|
Total value
at age 65
|
Invested
per year
|
|
35
36
40
|
$244,692
$224, 566
$157,909
|
$2,000
$2,000
$2,000
|
Wait an extra year to
start investing, and you
lose $20,126.
Wait five extra years
to start investing, and you
lose $86,783.
Here's another example
of why you want to start saving now. Let's say you want to
have $250,000 for your retirement by age 65. In order to achieve
your goal, here's what you'd have to put away per month, based
on your starting age and the growth rate of your investments:
What You Need to Save
per Month to Have $250,000 by Age 65
|
Starting Age
|
Growth Rate
7%
|
9%
|
11%
|
|
25
35
45
55
|
$95
$205
$480
$1,444
|
$53
$137
$374
$1,292
|
$29
$89
$289
$1,152
|
Based on this chart, if
you want to accumulate $250,000 by age 65, and you are currently
25 years old, you only have to put away $53 a month to reach
your goal (assuming a 9% return on your investments). But
start 20 years later, at age 45, and you'll have to invest
$374 a month -- more than seven times the amount when you
were 25.
Here's another example
of the advantage of starting early: Let's say you invest $200
a month at age 25 and get a 7% return on your investment.
At age 65, you're investment will have grown to $524,963.
But start 10 years later with the same monthly investment
at the same rate, and you'll have less than half that amount
-- $243,994.
Other Reasons
to Start Early
Aside from the obvious
financial advantages of getting an early start on your retirement
savings, there are several other good reasons to get going
now. By starting early:
- You have the freedom to work more with
high-return, higher-risk investments.
- You have more time to accumulate interest
from your investments.
- You have more time to evaluate and participate
in different investment strategies.
- You can recoup losses if you sustain
them.
And in case you're not
convinced, here are even more reasons to start early:
- Your retirement expenses may be more
than you anticipated.
- You may have to pay for more of your
retirement by yourself than you thought you would -- you
may not be able to depend on a pension plan or Social Security
in the future as much as you can now.
- Investment returns down the road may
be lower than you think they may be.
- Inflation and taxes may be higher in
the future.
IT CAN'T BE SAID ENOUGH
-- GET ON THE ROAD TO RETIREMENT EARLY
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