Start Saving By Age 25
It is difficult to start saving for retirement when your entry-level salary barely covers your student-loan payments. But beginning to build a nest egg during your first job is the most painless way to become a millionaire by retirement.
If you start saving for retirement at age 25, you only have to save about $4,830 annually to reach $1 million by age 65, assuming an annual return of 7 percent after fees. If you wait until age 40 to start saving, you'll need to tuck away much more: $15,240 per year, assuming the same retirement age and annual return. Alternatively, you could start out saving slightly less and boost your savings rate as you receive raises and bonuses.
A 20-year-old may only be able to save $100 per month, but the exercise of saving $100 per month when you are 20 will make it easier for you to go to $200 a month when you are 25 or 30, the act of saving is like developing a muscle, and if you start early with small amounts, you will build the saving muscle.
Call me for a FREE evaluation of your financial planning for retirement.
Jesse Alvarado
(562)822-5565
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