Are you too young to start saving for retirement? Not at all. In fact, now’s the best time.
Let’s say you’re 25 and your retirement goal is to have $1 million saved by the time you’re 65. If you start saving $655.30 per month, you’ll reach your goal in 40 years.
But if you wait until you’re 45, you’ll have to save $2,432.89 per month, which is a lot of money when you may have a family and a mortgage.
If you only had 10 years to save, your monthly savings amount would need to be $6,439.88. With only 5 years, contributions would need to be $14,704.57 per month. That’s assuming that the money saved in all four of these scenarios are based on a monthly compounded rate of return in a hypothetical 5 percent tax-deferred account.
In this hypothetical example, a 5 percent compounded rate of return is assumed on hypothetical monthly investments over different time periods. The example is for illustrative purposes only and does not represent any specific investment. It is unlikely that any one rate of return will be sustained over time. This example does not reflect any taxes, or fees and charges associated with any investment. If they had been applied, the period of time to reach a $1 million retirement goal would be longer. Also, keep in mind, that income taxes are due on any gains when withdrawn.