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Why You Should Be Saving for Retirement… Like Yesterday

Why You Should Be Saving for Retirement… Like Yesterday

February 01, 2016

I couldn’t even tell you how many people my age have told me they haven’t started saving for retirement. I cringe. Why??? Is the cost of going out every weekend killing your budget? Do you even have a budget!?!?!?  I promise you could stash away $50 to $100 each month and it wouldn’t be the end of the world. Plus, your future self will thank you. It’s time for this generation to start acting like adults. And for those of you who are regularly contributing to some type of retirement account, I applaud you!

So what’s the big deal about starting a retirement account now vs five years from now? Time. The saying “Time is Money” is pretty legit (thanks Mr. Benjamin Franklin). He was a smart man, that saying held true in the 1700’s and it still holds true today. There is a reason he is on that 💯 dollar bill. I won’t bore you with the time value of money, but I think we all know that $1000 today is worth (hopefully) waaaay more than $1000 say, 20 years from now. Give your money time and it will work for you and grow, grow, grow. If you push off saving for retirement, you will be working a lot harder at 40 versus 25 to fund that retirement account you’ve been oh so conveniently “meaning” to fund.

Let’s throw some visuals in here for you:

Scenario: Let’s compare a 25 year-old saving $1000 a year for 10 years versus a 40-year-old saving $1000 a year until retirement (both are named Carolyn, of course). Both accounts will continue to grow until age of retirement, in this case I have chosen 70. Assume an average return of 8% per year, 2.5% inflation. Both accounts also start with a zero balance.

Just to be clear… The point of these visuals are not to show an adequate amount of retirement assets. I simply want to emphasize the benefits of starting retirement savings sooner rather than later.

25 year old


40 year old


Would you rather: contribute $10,000 and have your money grow to $330,000 or contribute $30,000 and have your money grow to only $130,000. I choose the first option. The 40 year-old’s account doesn’t grow to nearly as much as the 25 year-old’s account even though she contributes $20,000 more overall. The 25 year-old, however, had a total of 45 years of growth (15 more than the 40 year-old). Time is money my friends. Give your money the chance to work for you.

p.s. if you are unsure of what type of retirement account is best for you. Don’t worry… there will be a post or two on that in the future!

Carolyn Rowland is a CERTIFIED FINANCIAL PLANNER™ passionate about empowering individuals to take control of their financial landscape. “We often tend to place our own priorities on the back burner for others, resulting in sacrifices we don’t often realize we’re making.”Carolyn believes in taking a values-based approach to financial planning. “Together we’ll define what matters most to you, what you want your life to look like, and develop a plan that fits your lifestyle.”

Carolyn Rowland is in the Milwaukee WI, area.