When it comes to putting money away for our retirement it is easy to believe that you have plenty of time to take care of it. It is an interesting thing about life that it seems to creep along looking forward, but flies when you are looking back. Do you remember when you could not wait to be a teenager and thought that day would never come? Well where did the time go?
Procrastination is something many of us wrestle with in many areas of our life especially our finances. It is so much easier to put it off until tomorrow. Let’s take a look at what it could cost you to wait.
Let say you are 40, and you plan on saving $10,000 a year until you are 65 and you can earn 6% on your money. For this example we will ignore taxes, your account will grow to $591,564. Past or assumed performance is no guarantee of future performance. If you wait 10 years to get started your account would only grow to $256,725. Cost of waiting $334,839. Obviously the sooner you get started the greater the potential.
The other side of the coin is how much you have to save to be at the same place had you started saving earlier.
In this example if you waited 10 years to start saving you would have to save $23,571 each year till 65 and average 6% return. You would have to contribute $353,570 to get to $581,564 instead of $250,000 had you started at age 40.
If you have been thinking about getting started towards your retirement sooner rather than later would be a good time to give us a call.