Why Save in Your 20s for Retirement in Your 60s?

I will show you why. Imagine two people saving money for retirement. They each save $200 month. The first starts at age 25, while the second waits until age 30. How big a difference can five years make? Lets run the numbers. I will use the Simple Savings Calculator from bankrate.com.

A person investing $200 a month for 35 years ends up with $588,357, which is not bad. But start five years earlier and the total is $936,264. That is a difference of $347,907! Five years of investing $200 a month comes out to an extra $12,000. So putting in $12,000 in your 20s can make a difference of nearly $350,000.

This is a simplified example, but you get the idea. The more you save right now, the less you have to save later. There is no time like the present.