When-to-start-saving.aspx

How the Age  at which you start saving affect your Retirement Income?


                            

                               The age you start saving for retirement is the most important factor, that affects your retirement income.The reason being, you take advantage of the compounding, wherein the interest earned becomes the principle and  therefore grows even more faster. To reiterate the need to save early, lets consider the following example.

      Consider the following case of 2 people,  John and Micheale, needing the amount of $200,000 to kick start their retirement. John starts saving from age 23 while Micheale starts savings at age 33. lets assume the savings interest rate is 8% and the age at which they retire at 65.

           John's Savings Table                                                                      Micheale's Savings Table

For $200,000 of savings to be available at their retirement, john will only have to save, about $607,per year to get there while micheale has to save as much as $1380 until age 65 to get the same savings as john! so micheale is forced to save more than double the money as john just to catch up for 10 years of lack of saving!

Also, if Micheale saves as much as $1380, from age 23, he only needs to save for 8 years! to get to the same amount of 200000, the rest his interest earning will take care.... (continued).

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