Why Starting to Save Even a Little Earlier Can Mean Hundreds of Thousands More at Retirement
Bottom line
Waiting 10 years to start saving doesn't cost you 10 years. it costs you $200,000.
In this guide
What it is
Compound interest is when the money you earn on your savings starts earning its own money. so your balance grows faster and faster the longer it sits.
By the numbers
If you invest $200 a month starting at 22, you'll have about $525,000 by age 62 at a 7% annual return (the average long term growth rate of a broad stock market index fund). Start the same habit at 32 and you end up with around $243,000. a $282,000 difference from just 10 years of waiting.
How it works
Your $200 earns returns in month one, then in month two you earn returns on your original $200 plus last month's gains. Each month the base amount grows, so each month's gains are slightly bigger than the last. slowly at first, then dramatically.
The catch
The growth is almost invisible for the first 5 to 10 years, which tricks most people into thinking it isn't working. The majority of your final balance. often 70% or more. gets built in the last decade before retirement, not the first. Stopping early or starting late doesn't just delay growth, it cuts off the most powerful part.
What to check next
Open an IRA online this week and set up a recurring $50 monthly deposit. the account type matters less right now than starting the clock.
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