This Element is an excerpt from Save Your Retirement: What to Do If You Haven’t Saved Enough or If Your Investments Were Devastated by the Market Meltdown (9780137029006) by Frank Armstrong, III and Paul B. Brown. Available in print and digital formats.
Start saving for retirement early: why it’s so crucial and how to make it less painful.
It’s impossible to overemphasize the importance of starting early to save for retirement. Let’s say you and your spouse both resolve to fully fund IRAs: that’s $10,000 per year. If you contribute for 40 years with an average return of 8%, you’ll accumulate $2,590,565. Wait five years to start, and you end up with $1,723,168. The $50,000 you didn’t contribute costs you $867,397!