Age 40
Age 25
Let's assume you stash away $5,000 at age 25 and that you earn a compound annual return of 7.5% for the next 40 years until you retire at the age of 65. Your initial $5,000 investment would grow to approximately $90,000 (18x your initial investment).
Age 65
Age 40
$30,500
$25,000
$20,00
$15,000
$10,000
$5,000
0
Age 25
Age 65
$90,000
$70,000
$50,000
$30,000
$10,000
$5,000
0
Let's assume that you delay investing the $5,000 until age 40. If we assume that same 7.5% annual growth rate, you would have approximately $30,500 when you turn 65 (only 6x your initial investment and approximately $60,000 less as a result of this 15 year delay).
Click on each age below to reveal how saving early can pay off: