Retirement Planning It's Best to Start Early
Time can be a powerful ally. You should begin investing in an IRA as soon as possible, because the longer your money has to grow, the better. Consider the example of Jane and Mary. Jane began investing in her IRA at age 21 and stopped at age 30, but left her money in her account. Mary waited until she reached age 35 to invest but continued funding her account until she reached age 65. As the chart shows, even though Jane contributed much less, her account was worth more at retirement because it had a longer time to grow.
This is a hypothetical example and is not intended to represent the results of an actual investment. These are gross figures and do not show after-tax returns. This assumes that contributions have been made at the beginning of the time period measured. Based on an interest rate of 10% compounded month; effective rate of 10.47%
There is no assurance that contributing less money over a short time period will result in receiving more money than one who invests more money over a large period of time.
Investors in 401ks, IRAs and other retirement plans should be particularly diligent about making early contributions in as large an amount as possible.