The cost of waiting can be surprisingly high. It's not just that you are able to contribute more money over time. It's the effect of time itself and a powerful force called compounding. Interest upon interest and earnings on interest are what can help make even small investments add up.
Consider four people who begin saving for retirement at different stages of their lives. Each contributes $100 a month from different start ages until they are 65. They invest in a hypothetical investment that earns 8% annually. Keep in mind that the 8% rate of return is hypothetical is not a guarantee of any actual rate of return.
In our example, at age 65 the person who invested for 40 years has $306,052 more than the individual that only invested for 10 years. This is for illustrative purposes only. It should not be used to project or predict your own retirement savings, because there is no guarantee this rate of return will be achieved in your retirement investments.
