While young people may have a number of financial goals, such as purchasing a car or saving for a house, financial experts believe that thinking about retirement as early as possible should be a priority for them.
And the earlier you begin, the more likely it is that you will be able to achieve your financial goals.
According to CNBC, all it takes is $1,000 per month invested over your lifetime to potentially become a millionaire.
And, according to Vanguard, the key to really attaining a million dollars is not that difficult: it’s only a matter of time.
According to Vanguard’s website, if you give your savings enough time to grow, you’ll only need a modest amount of money invested on a constant basis to end up with a significant amount of money.
According to Vanguard, “Because compounding is so powerful, investing early allows you to have more options later in life.”
Considering that just half of Americans have assessed how much they need to save for retirement, according to the Labor Department, it’s important to remember that (DOL).
Furthermore, in 2020, more than a quarter of private-sector employees who had access to a defined contribution plan — such as a 401(k) plan — did not take advantage of the opportunity.
To put things in perspective, the average American will spend around 20 years in retirement, so saving money is a habit that should be formed as early as possible, according to the Department of Labor.
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“Retiring is an expensive proposition. In order to maintain your quality of life when you quit working, experts estimate that you will require 70 percent to 90 percent of your pre-retirement income,” according to the Department of Labor.
CNBC went into greater detail to calculate how much an additional $1,000 per month invested now will be worth when you are ready to retire, assuming you put your money in a retirement account and earn an estimated 4 percent return on your investments, and that you retire at the age of 67, among other assumptions.
Moreover, according to CNBC, the math does not take into account fees and taxes, as well as “any curveballs that life may throw at you, so prepare accordingly.”
According to CNBC, here’s how it’s broken out.
Start saving $1000 a month at the age of 20, and you’ll have $1.6 million when you retire in 47 years if you keep up the pace.
People who begin saving at that age will accumulate monthly payments totaling $560,000; the early start, along with a projected 4 percent annual growth rate over the years, will result in assets that have surged to nearly $1 million.
“Beginning when you are younger allows you to take advantage of the power of compound interest,” according to CNBC. “This means that you will receive returns on the money you invest, and even better, returns on your returns,” explains the author.
It is still possible to make more than $1 million if you wait until you are 30 years old. Starting at that age means that you will have saved $444,000 and will have received roughly $600,00 in interest income over the course of your life.
In general, the longer you put off taking action, the more money it will cost you in the long run,” says the author. If you begin saving at the age of 40, your funds will increase to $500,000 for your retirement, with more than $300,000 set aside and $250,000 in return.
In addition, if you begin at the age of 50, you will retire with $300,000 at the age of 67, having invested $204,000 and earning $90,000 in interest.”
CNBC reports that “if you’re wondering when you should start saving, the time is right now.”