Procrastination can really hurt your future financial security.
Most of us need to be saving rather aggressively for retirement — and investing that money effectively. One of the smartest moves you can make is starting to save and invest as soon as possible — ideally, 25 years ago.
OK, it’s probably too late for that, but know that it’s critical to not procrastinate. Your earliest invested dollars are your most powerful.
Image source: Getty Images.
Imagine you’re 35 and you plan to retire at 65, in 30 years. Let’s say you put off saving for retirement for five years. (You’re only 35, after all!) Here’s how your money will grow, from age 40 to 65:
|
Growing at 8% for |
$7,000 invested annually |
$15,000 invested annually |
|---|---|---|
|
5 years |
$44,351 |
$95,039 |
|
10 years |
$109,518 |
$234,682 |
|
15 years |
$205,270 |
$439,864 |
|
20 years |
$345,960 |
$741,344 |
|
25 years |
$552,681 |
$1,184,316 |
Calculations by author.
That’s impressive, but what if you’d started socking money away right then, at age 35? Your money would have 30 years, not 25 years, in which to grow. Investing $7,000 annually would get you to $856,421, and $15,000 annually would have you at $1,835,188 — a big difference!
Your nest egg will be growing more powerfully in your later yours, so a head start can really help. Here are a few other things to know:
So start (or continue) investing! You’ll thank yourself later.
Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.