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"Your retirement can be whatever you want it to be, especially if you make good use of your time." - Charles Schwab
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| The sooner you begin saving, the more you'll benefit from the power of tax-deferred compounding and possibly company match contributions. Even small amounts set aside today can grow into a very large sum over the years for your future needs. For example, let's take Betty and Pete who are both 25 years old. |
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| Betty starts savings for retirement immediately and contributes $70 of her weekly pay to her account. |
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| Pete doesn't think he can "afford" to contribute and waits ten years to begin making contributions. |
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| As a result of waiting, Pete actually needs to make weekly contributions more than
twice those of Betty to have the same amount of savings she has at retirement. |
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Starting Contributions Weekly
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Contribution Value of Account (Age 65)
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| Betty, Age 25 |
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$70.00 |
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$977,482 |
| Pete, Age 35 |
$163.51 |
$977,482 |
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| This hypothetical example assumes that contributions compound monthly at a rate of 8% over 40-(Betty) and 30-(Pete) year time periods, that no current taxes are paid on earnings in a retirement account, and that all contributions made by Pete are rounded to the nearest dollar. |
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| If you haven't started contributing to your retirement plan, or if you wish to increase your 401(k) savings rate, start today. Time is one of the most powerful investing tools available to you. |
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