One of the best ways to make your money work hard is to start now. 

The power of time  

Why is time of the essence? The sooner you begin saving – even small amounts – the better your chance of reaching your retirement goals. Consider the following example that shows how much waiting to invest can cost. 

Putting time on your side

Investor A invested $1,000 per year for 10 years, beginning at age 30. Investor B also invests $1,000 per year, but began at age 45 and did so for 20 years. Even though Investor A saved less money – half as much as investor B, Investor A had more money – over 50% more – at the time of retirement, all because of starting earlier. 

What’s the secret?

Although Investor A invested significantly less than Investor B, the extra years of compounding interest are what boosted Investor A’s bottom line. Investor B will now have to save considerably more to catch up. This is the cost of waiting, a cost that quickly adds up. It doesn’t matter what age you are – more time is on your side if you start saving for retirement today.

What you can do next

Use a savings calculator to see compounding in action and how little changes to your spending can have a big impact on how much you can save for retirement. Better yet, commit to increasing your ongoing contributions to your 401(k) or IRA.