It’s 6:55PM on May 21, 2011 as I write this column, and according to a few misguided folks, the world should’ve witnessed the rapture by now. Well it didn’t and I feel for the people who were duped into selling their homes and cleaning out their IRAs and 401Ks in expectations that the world was over, as we know it.
Time marches on and so does life. That means we’ll continue to work, pay our bills, raise families and grow older. If all goes well, retirement is inevitable and unlike some wild prediction about the rapture, this event is most certain, so you’d better start preparing for it now.
Time is Not on Your Side
When it comes to saving for , time is the enemy. It takes time for money to accumulate because interest compounds slowly… at first. But just like the proverbial snowball, once it gets rolling, you can’t stop it. Albert Einstein has been reported to say, “Compound interest is the most powerful force in the universe.”
The High Cost of Waiting
The best time to start saving for retirement is immediately after . You’ll be amazed to see the difference between saving early rather than waiting. Want to save $1 million dollars by age 65? You’d better get started soon. The longer you wait, the more you’ll have to put away each month to reach your retirement goals. Look at the following chart and the accompanying graphic for a detailed comparison of time versus money.
- 25 years old? You have to put away $158 a month to reach $1 million dollars.
- Start at age 35, and you’re putting away $442 a month to reach your goal.
- Begin at age 45, and you’d have to put away $1,317 a month.
- Wait until age 55, and you’re putting away a hefty $4,822 a month.
- Wait until the last minute (age 60) and you’d have to stash $12,914 a month to reach $1 million by age 65.
As you see, the sooner you start saving, the less money you’ll need to put away each month to reach your retirement income goal. And with today’s economy and cost of living, most families don’t have a lot of money available to save. So get started now, and encourage your kids to start saving as soon as possible towards their futures.