Hello everyone, I hope you’re doing well! On today’s DueNorth Insight, I’m going to talk about the benefit of saving early, the cost of procrastination and the longer time frame that you have to save the more you can take advantage of what I call “The magic of compounding.”
And so I’m going to give you an example, so you’re age 25 - and you’re going to work for 40 years - retire at age 65. You’re going to start saving $800/month into your 401(k), so a little bit less than $10,000/year and we’re going to earn an average annual rate of 6%.
At age 65 you will have saved over $1.5 Million. And that’s not even counting the company match.
Now what happens if you decide, I’m going to wait until I’m age 35? So we’re going to start saving in that 401(k) at age 35, so we’re going to be working and saving for 30 years. We’re going to use the same exact scenario, same dollar amounts, same rate of return so at the end of that 30 years you’ll have saved a little over $800,000.
You can see how holding off for those 10 years of savings costs you over $789,000. And also to put that into perspective, had you been saving those 10 years it would have only cost you $96,000. You can really see the longer you wait it can set you back by hundreds of thousands of dollars.
So just remember, start as early as you can. And if you have any questions on your savings please contact us at Priebe Wealth. And this concludes today’s DueNorth Insight.
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return do not reflect the deduction of fees and charges inherent to investing. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.