Why Saving Early Matters
Updated: Jun 18, 2022
Why Saving Early Matters
By Lacey Houck
Most individuals do not fully understand the power of compounding interest when you start investing early. If you are age 30 and begin investing $333 per month into a Roth IRA and average a 7% rate of return until age 60 you would have $389,000 saved for retirement. Over the 30 year time period you would have contributed $120,000 to your retirement savings and would be able to access $389,000 completely tax free.
If you instead waited until age 40 to begin saving, contributing $500 per month and averaging a 7% rate of return, you would have contributed the same total of $120,000 but only have $254,000 saved for retirement. Waiting that extra 10 years caused your retirement savings to be significantly less even though you were saving more money per month.
The sooner you start the less you need to save to reach the same goal!