The Cost of Waiting to Save

The Story of Alix and Bart

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Time is money, as demonstrated by the table on your right.The Cost of Waiting to Save

You can see that Alix started saving early, contributing $1,200 a year for ten years.  Assuming an annual rate of 8% for the next 40 years, the value of the account will grow to $188,922.

Bart put off saving for retirement for ten years and contributed $1,550 per year for the next 30 years, also earning 8% throughout. The account values at the end of 40 years are nearly the same!

The difference is that Alix only invested $12,000 while Bart had to invest $46,500 to achieve a similar end result.

If this is all done in a ROTH IRA, for which the current contribution limit is $5,500 a year for individuals under age 50, the gains are all TAX FREE ! ! !

The obvious lesson is this: saving is never easy, but, if you can discipline yourself to save early you can enjoy a higher quality of life – for less total cost.

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This chart is for illustrative purposes only and is not intended to reflect actual growth rates or investment performance.