You Are Never Too Young to Think About Retirement
It is never too early to start planning for retirement. Investing in a retirement plan early may offer significant advantages to waiting until a later age — even if you continue to save for a greater number of years. Take for example the following scenario:
A Retirement Savings Scenario
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| Katie started saving $83 per month at age 21. At age 30 she stopped contributing. She left the funds in the plan until age 65. |
Matt started saving $83 per month at age 35. He continued to contribute the same amount for the next 30 years. |
This is a hypothetical illustration only, assuming an 8% annual return compounded monthly, and is not indicative of the performance of any particular investment.
Both Katie and Matt earned an 8% annual return, compounded monthly. Even though Katie contributed to her plan for only 10 years and Matt contributed to his plan for 31 years, Katie’s plan was worth $113,000 more than Matt’s because she started earlier. In fact, Matt contributed more money to his plan — $21,000 more. But Katie’s money had a longer time to grow.
Saving early provides the opportunity for greater rewards tomorrow
| Katie | Matt | |||
| Age | Annual Contribution | Accumulation | Annual Contribution | Accumulation |
| 21 | $996.00 | $1,123.23 | $0.00 | $0.00 |
| 22 | $996.00 | $2,249.80 | $0.00 | $0.00 |
| 23 | $996.00 | $3,469.88 | $0.00 | $0.00 |
| 24 | $996.00 | $4,791.22 | $0.00 | $0.00 |
| 25 | $996.00 | $6,222.24 | $0.00 | $0.00 |
| 26 | $996.00 | $7,772.02 | $0.00 | $0.00 |
| 27 | $996.00 | $9,450.44 | $0.00 | $0.00 |
| 28 | $996.00 | $11,268.17 | $0.00 | $0.00 |
| 29 | $996.00 | $13,236.76 | $0.00 | $0.00 |
| 30 | $996.00 | $15,285.75 | $0.00 | $0.00 |
| 31 | $0.00 | $16,554.46 | $0.00 | $0.00 |
| 32 | $0.00 | $17,928.47 | $0.00 | $0.00 |
| 33 | $0.00 | $19,416.53 | $0.00 | $0.00 |
| 34 | $0.00 | $21,028.09 | $0.00 | $0.00 |
| 35 | $0.00 | $22,773.41 | $996.00 | $1,123.23 |
| 36 | $0.00 | $24,663.59 | $996.00 | $2,249.80 |
| 37 | $0.00 | $26,710.66 | $996.00 | $3,469.88 |
| 38 | $0.00 | $28,927.63 | $996.00 | $4,791.22 |
| 39 | $0.00 | $31,328.61 | $996.00 | $6,222.24 |
| 40 | $0.00 | $33,928.87 | $996.00 | $7,772.02 |
| 41 | $0.00 | $36,744.95 | $996.00 | $9,450.44 |
| 42 | $0.00 | $39,794.76 | $996.00 | $11,268.17 |
| 43 | $0.00 | $43,097.71 | $996.00 | $13,236.76 |
| 44 | $0.00 | $46,674.79 | $996.00 | $15,368.75 |
| 45 | $0.00 | $50,548.78 | $996.00 | $17,677.69 |
| 46 | $0.00 | $54,744.30 | $996.00 | $20,178.28 |
| 47 | $0.00 | $59,288.05 | $996.00 | $22,886.41 |
| 48 | $0.00 | $64,208.93 | $996.00 | $25,819.31 |
| 49 | $0.00 | $69,538.24 | $996.00 | $28,995.65 |
| 50 | $0.00 | $75,309.88 | $996.00 | $32,435.62 |
| 51 | $0.00 | $81,560.56 | $996.00 | $36,161.10 |
| 52 | $0.00 | $88,330.05 | $996.00 | $40,195.80 |
| 53 | $0.00 | $95,661.40 | $996.00 | $44,565.37 |
| 54 | $0.00 | $103,601.25 | $996.00 | $49,297.62 |
| 55 | $0.00 | $112,200.10 | $996.00 | $54,422.64 |
| 56 | $0.00 | $121,512.66 | $996.00 | $59,973.04 |
| 57 | $0.00 | $131,598.15 | $996.00 | $65,984.11 |
| 58 | $0.00 | $142,520.73 | $996.00 | $72,494.11 |
| 59 | $0.00 | $154,349.88 | $996.00 | $79,544.43 |
| 60 | $0.00 | $167,160.84 | $996.00 | $87,179.92 |
| 61 | $0.00 | $181,035.11 | $996.00 | $95,449.15 |
| 62 | $0.00 | $196,060.93 | $996.00 | $104,404.73 |
| 63 | $0.00 | $212,333.89 | $996.00 | $114,103.61 |
| 64 | $0.00 | $229,957.50 | $996.00 | $124,607.50 |
| 65 | $0.00 | $249,043.86 | $996.00 | $135,983.20 |
This is a hypothetical illustration only and is not indicative of the performance of any particular investment.
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