The best time to start saving for retirement is now. Here’s an idea of the difference time can make in your retirement savings plan. Assume you can set aside $6,000 ($500/mo) each year and can put the money in an account earning 7.0% annually. Here’s how much you would accumulate over a 5, 15, 25 and 35 year period.

5 years $34,504
15 years $150,774
25 years $379,494
35 years $829,421

See the difference beginning as early as possible can make?

Let’s look at it another way. Assume you will need an additional $200,000 at the beginning of retirement (after Social Security and any pension benefits). If you are able to invest in an account earning 7.0% compounded annually, here’s how much you will need to deposit each year to have $200,000 at age 65.

Age to Begin Annual Payment
30 $1,352
35 $1,979
40 $2,955
45 $4,560
50 $7,438
55 $13,529
60 $32,503

Again, you can see the difference time makes. Obviously, the more you can contribute to your savings plan each year the larger the account will be.

However, starting now, with any amount, will create a larger account at retirement than if you never begin. Also, as you can see, time is your best investing friend. The more time you give funds to compound, the larger even small amounts will grow.

The moral – start now. Start with whatever you can budget. Increase that amount along the way as you are able to do so. Don’t wait until you have everything else lined up. Your retiring self will thank you.