Group of young professionals meeting at table

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

 Katie_401k.png  Matt_401k.png
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.

 
NeverTooEarly_401k_Graph.png
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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