Many people plan for retirement sometime between the ages of 62 and 67, based upon varying factors and circumstances. And if those people began saving at age 21 and kept at it until age 67, you’d be amazed at how much money they would’ve saved.
Compound That Interest
It’s all about the power of compound interest, according to Emily Lorsch at CNBC. In simple terms, compound interest is interest you earn on top of interest. With a savings account that earns compound interest, you earn interest on the initial principal plus on the interest that accumulates over time. Purchasing a certificate of deposit (CD) from a bank is one example.
Gen Z: Making it Happen
For young people just starting their careers, it’s not easy to save when trying to pay off student loans. Nevertheless, a good number are making it work. According to Transamerica, a non-profit organization that performs research on retirement, the youngest working generation, Gen Z, is doing a remarkable job saving for retirement. Over 30% are prioritizing retirement savings, and of that percentage, 67% who have been offered a retirement plan, are saving for it.
Retirement Calculator At the Ready
The thought of retiring and funding your retirement adequately may be daunting. But if you start planning now, you’ll certainly be thankful later. It’s never too early to think about retirement. For example, if you start saving at age 25 and save $670 per month you would have $40,000 yearly; $850 per month would net you $50,000 yearly and $1,000 in monthly savings would result in $60,000 every year.
Check out this Retirement Savings Calculator to get an idea how interest-only retirement plan works and how your nest egg will grow over time if you continue to invest.