Financial experts generally agree
that you'll probably need at least 75% of the income you currently
make to maintain your current lifestyle after retiring. To figure
out how much you should be investing to provide that much income,
click here to begin
using our retirement planning calculator.
The Importance of
Starting Early
Some careful planning now has the potential
to make your future more secure. Putting away just a small amount
on a monthly or annual basis can help you get on track toward your
goal. The chart below illustrates the dramatic difference between
investing early and waiting. In order to have $1 million at age
65, you'd have to invest the following amounts at various ages.
The chart is hypothetical and assumes an 8% annual return. Typically, the greater the return potential,
the greater the risk. This is not representative of any particular investment or mutual fund.
| Age |
|
Years
Until
Age 65 |
|
Monthly
Investment |
|
| 20 |
|
45 |
|
$189.59 |
| 30 |
|
35 |
|
$435.95 |
| 40 |
|
25 |
|
$1,051.50 |
| 50 |
|
15 |
|
$2,889.86 |
The Power of Compounding
Once you establish a foundation
for your investment, you can help its potential growth by reinvesting any interest,
dividends and capital gains your mutual funds pay you right back
into the market. Compounding may produce dramatic results over time.
The sooner you begin investing, the more time you'll have to take
advantage of the power of compounding.
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