A Tale of Two Savers

A Tale of Two Savers

Sally saver starts saving $2,000 per year at age 21 and stops saving entirely 10 years later at age 31. Steve Spender starts saving $2,000 per year at age 31 and keeps saving until he retires at the age of 65. Both savers invest in their 401k which averages an annual interest rate of 7%.

Sally contributes a total of $20,000 over 10 years. Steve contributes a total of $70,000 over 35 years yet he ends up with $18,551.49 less than Sally! This is due to compound interest. Your money needs time to grow! Start saving now, no matter how small the amount!