You’re never too young to plan for your financial future!
The moment you start working, you’ll be faced with financial decisions concerning the pay that you’ve earned. As a person nearing retirement age, you see the importance of thinking ahead financially. You know how important a 401K plan and a diverse portfolio is. That’s why you’re glad that you learned at a young age to invest in your future. It’s what gives you a sense of security as you prepare to retire from your job.
The ideal age to start saving for retirement is whatever age you qualified for IRA contributions. You could have been in your late teens or early twenties. You may not have started planning for your financial future until your thirties. Whenever you decided to get serious about saving, you started to look into options that helped grow your nest egg.
If you invested $3,000 a year for ten years in a tax-deferred retirement account at the age of 25 and never invested another penny into your retirement fund, you’d have a $30,000 investment that amassed to $338,000 by the time you retired. That is, of course, if the annual return rate was 7%. This is assuming that you were in your mid-twenties when you made the investment.
If saving for retirement isn’t a possibility until you were in your late 30s, you could have still invested the same amount of money ($3,000) but done it for 30 years opposed to 10 years and had $90,000 of your own earnings to invest by the time you reached your 60s. At 7% annual return, you’ll have $303,000 which is a great deal of money by any estimation.