Two savers, the same $200 a month, a 10-year difference in when they start. All rates are hypothetical, and examples ignore taxes, fees and inflation.
Scene 1
Two savers
Saver A starts at 25
Starts at 25 · $200 a month
Saver B starts at 35
Starts at 35 · $200 a month
Saver A starts saving at 25. Saver B starts at 35. Both put away the same $200 a month until age 65, at the same hypothetical 6% annual return, compounded monthly.
Scene 2
The race
Both lines grow until age 65. Saver A (green) starts at 25 and reaches about $398,000. Saver B (navy) starts at 35 and reaches about $201,000. Hypothetical 6% return.
Scene 3
The gap
Saver A: about $398,000
Contributed $96,000 · Growth about $302,000
Saver B: about $201,000
Contributed $72,000 · Growth about $129,000
Contributions Hypothetical growth
Saver B contributed $24,000 less, but ended with about $197,000 less.
Saver A contributed $96,000 and ended with about $398,000. Saver B contributed $72,000 and ended with about $201,000. Saver B contributed $24,000 less, but ended with about $197,000 less. Most of the difference is hypothetical growth, not contributions.
Scene 4
Try it
Cost of waiting 10 years: about $197,000
Starting at 25: about $398,000 ($96,000 contributed). Starting at 35: about $201,000 ($72,000 contributed), at a hypothetical 6% rate.
Move the sliders to change the monthly amount ($50 to $1,000), the hypothetical rate (1% to 10%) and the delay (1 to 15 years). The chart and the cost of waiting update as you go. Saver A always starts at 25; both save until 65.
Scene 5
Takeaway
The best time to start is usually sooner than you think.
