Shortly after I graduated from North Park University, I took on a full time position with a property management company. I was 25 at the time and thankful for the opportunity — getting a full-time job right out of college was a blessing. I stayed at that job for about five years.
During that period, I saved exactly $0 for retirement. Nothing. I wasn’t completely irresponsible with my money: during that time, I saved for a wedding and a honeymoon, purchased some necessary items to furnish a new apartment, and paid for a vacation with cash to avoid racking up credit card debt. My wife and I also put together a “rainy day fund” that covered about six-months-worth of expenses. But somehow, despite being fiscally responsible, I never once considered saving for retirement.
I didn’t make a lot of money at that job, but in retrospect, I didn’t need a lot of money to save for retirement. By cutting one or two expenses, I could have easily put $25 a week — $1,300 a year — in a Traditional or ROTH IRA.
Had I started to do this at the age of 25, continued to do so until the age of 65, invested all that money in a ROTH IRA, and received a conservative 4% annual return, my retirement savings would look like this:
According to Bankrate.com’s ROTH IRA calculator,* I would contribute $52,000 over 40 years and my IRA balance would be $128,474. Of course, I’ll need more than that for retirement, but it’s still not bad for $25 a week!
Unfortunately, I didn’t put this plan into action five years ago. So what if I started this retirement plan at the age of 30?
In this scenario, I’ve contributed $6,500 less due to starting five years later. But because of interest from investing, I’m projected to have $28,896 less in my ROTH IRA for a total of $99,578 by the age of 65.
The sooner you start saving, the better. But if you missed opportunities to save and invest in the past, don’t let that discourage you – there’s no time like the present to start planning for retirement! These projections indicate I would have had almost $29,000 more had I started saving earlier, but having $99,578 is a lot better than having $0! And as you can see, you don’t have to be rich and invest a lot of money; saving a little each week can have a big impact when you retire.