Millennials, Adulting And The Benefit of Saving Early
This past weekend, we had the opportunity to have several millennials, friends of our daughter, at our dinner table. One of the them asked for our help “adulting” – a term coined by this generation to describe all things related to responsibility when one enters the adult world.
We knew we had a limited amount of time and attention from these millennials, so we talked about what we think is the most important data for them to know – the power of compound savings. And, as they say, a picture is worth a thousand words, so we used the graphic below to quickly demonstrate the power of compounding. Take a look at the chart below and share it with your millennial. In this slide – you will see the unbelievable power of saving early.
• Susan started saving early. She put away a total of $50,000 over a ten year period, from the age of 25 to 35. Then she didn’t put in another dime (hence the dotted line). By retirement Susan had $602,000 from just that $50,000 initial investment.
• By contrast, Bill waited 10 years before he started to save. He put away $150,000 from the age of 35 to 65 ($5,000 per year for 30 years) and he ended up with less than Susan because he lost out on the benefit of those first ten years of compounding.
• And then there’s our hero, Chris. He put away $5,000 per year for 40 years (a total of $200,000) and ended up with over $1.1 million in his retirement account.
• The moral of the story is: Save Early And Save Often!
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