When is the best time to start saving for retirement?

[Josh28]

As soon as possible. You will end up with more money at retirement if you save $5000 a year between 20 and 30 than if you save $5000 a year from 31 to 65!
These are the best time for saving....

[rennigade]

The best way is to take money and put it in a retirement account. What kind of question is this? If you cannot afford to put money in a retirement account either change your spending habits or do not contribute to a retirement account. Pretty simple if you ask me.

[isaac]

As soon as possible. You will end up with more money at retirement if you save $5000 a year between 20 and 30 than if you save $5000 a year from 31 to 65!
These are the best time for saving....

I'm sorry I don't understand this.. can you explain?

30-20=10years, 10*5,000= $50,000

65-31=34years, 34*5,000= $170,000

[auron]

I'm sorry I don't understand this.. can you explain?

30-20=10years, 10*5,000= $50,000

65-31=34years, 34*5,000= $170,000

He's referring to the time value of money.

Time Value of Money Equations

Assuming a 7% APR rate of return:
Saving $5000/yr from 20-30 has a future value at 65 of $737,562 (does not include any savings after 30)
Saving $5000/yr from 31-65 has a future value at 65 of $641,294

Saving $5000/yr from 20-65 has a future value at 65 of $1,428,747

Moral of this story, save early and save often.

[annskilo]

time value is indeed key! Get a good eduction in finance and you will see clearer. There is a great online program where real university teacher from all over the world give classes. there is one in finance, too. You will get video classes and you have to do assignments. You will also get a certificated if you pass but i'm not sure if that would carry any weight. Anyway I am currently on the Finance course and I am doing it more for the sake of educating myself. The website is called coursera! (can't put links yet).

Enjoy *

[annskilo]

I guess you should add, that you need to find some source of income that gives you on average 7% on your money. just putting it into a retirement fond or in the bank wont cut it. time to strengthen your investment muscle, too. keep on asking yourself, how you can achieve it and you might just find a way!!!

good luck

[UnknownXV]

He's referring to the time value of money.

Time Value of Money Equations

Assuming a 7% APR rate of return:
Saving $5000/yr from 20-30 has a future value at 65 of $737,562 (does not include any savings after 30)
Saving $5000/yr from 31-65 has a future value at 65 of $641,294

Saving $5000/yr from 20-65 has a future value at 65 of $1,428,747

Moral of this story, save early and save often.

If only a safe & consistent 7% return was possible over that many decades.

[auron]

If only a safe & consistent 7% return was possible over that many decades.

The example was to illustrate the math behind TVM.

A nominal 7% ROI isn't unrealistic in the stock market over the long term, but I am not advocating that it is without risk. Consider having one of each stock in market (think of a well balanced/diversified portfolio) would mitigate that risk to be equal to market risk. At that point you would expect the same return as the total market (5-10% over long term).

But you are correct, there is always risk involved.

[jpg7n16]

If only a safe & consistent 7% return was possible over that many decades.

It is very possible. In fact, returns over 7% are to be expected for the period of time in question.

Anyone who doesn't believe that is still living in the fear of 2008, and is blind to the rest of history.


Over 40 year periods of time here are the facts about the stock market: (all figures are annualized compounded returns)

Number of 40 year periods: 102
Number of 40 year periods which averaged greater than/equal to 7%: 85 (83.33% of all 40 year periods)

Worst 40 year period in history: +5.46% /year
Best 40 year period in history: +12.56% /year
Average 40 year period: +9.30% /year

See all the source data year by year here: CAGR of the Stock Market: Annualized Returns of the S&P 500

[UnknownXV]

I think I am highly cynical because of how in debt the entire world is, as well as extreme concerns of WW3.

The waves are crashing against the boat and I just hope they don't get bigger.

If the US gets its act together, it may be alright, but Qe3 is pumping so much money into the market deflating the currency while interests are kept at basically 0%. If the Federal reserve holds it to this, the 20 year history for stocks won't be as pretty. There were periods where even a savings account in a normal bank would yield over 10%...

I was born in the wrong time.

[Jimhassel]

Yes I agree. One should start saving money for retirement as soon as possible because if you plan to so after say ten years later then what is the guarantee that you will be having a steady source of income at that point of time. Whatever be your savings take a certain amount of percentage from it for post retirement needs.

[My Own Advisor]

As soon as possible. You will end up with more money at retirement if you save $5000 a year between 20 and 30 than if you save $5000 a year from 31 to 65!
These are the best time for saving....

Totally agree

[annskilo]

I wish I would have had money and courage to buy stocks in 2008! hell I wish I would have borrowed a load of money and invest it!
oh well, next time