If you’re over 40 like myself you’ve probably constantly thought something like “I wish I knew now then what I know now.” Small amounts of money stashed away when you are young can easily give you a nice retirement boost.
Starting younger lets you take advantage of the power of compound interest. Compound interest is a simple but very powerful concept that a smart saver will want to use to their advanteage.
Putting just $50 a month into a retirement account can equal a six-figure payout when you are ready to retire.
Lexchoice crunched the numbers, and we can tell you how much investing an extra $50 a month now will yield when you are ready to retire.
Just a few things to consider: these numbers assume you put the money in a retirement account, you get a 6% return on your investments (that’s pretty conservative) and that you will retire at age 67. Continue reading for a full breakdown of how large your savings will grow over time.
Start retirement Saving at age 40: It’s never too last to start saving or retirement! Obviously, the sooner you start the better off you will be, but anything is better than nothing. Even you you start saving an additional $50/month at age 40 you would have around $40,000 extra for retirement!
Start retirement Saving at age 30: The younger you start saving the more you take advantage of the compounding interest. Start saving an additional $50/month at age 30 and you would have around $81,000 for retirement! You can see how this is starting to add up.
Start retirement Saving at age 20: If you are disciplined enough to start saving extra with your first job you’ll definitely see the power of compounding interest. Start saving an additional $50/month at age 20 and you would have around $150,000 for retirement!
To put things more into perspective if the 20 year old had stashed away $50/month for 20 years and stopped saving when they turned 40 they would have accumulated 23,395. If that money sat in a retirement account until they retired at age 67 they still would have accumulated almost $113,00! They would have only invested $12,000 during their 20 years.
The power of compounding interest is pretty amazing. Take advantage of the time you have left before retirement. I sure wish I understood this more when I was 20!!!