What Age Should I Start Saving For Retirement?

Ask this question to 100 people and you will receive 100 very different answers. The fact of the matter is there is no right age to start. But don't fret (did I just say fret?) knowledge is power!

To borrow a line from Star Wars, "Use the force Luke." The force I'm speaking of is compound interest. Since our main objective is to find an ideal age to begin saving, you have to understand the difference between simple and compound interest. Simple interest can be figured by taking an initial investment that earns interest annually for a period of (let's say) two years. After the first year you have your original investment plus the interest. In the second year you have the initial investment plus the interest for the second year, the interest from the first year is not added. What you're lacking is that you don't earn interest on the interest you already earned. It's not compounded. Can you see where I'm going with this? With compound interest you take that initial investment and earn interest in the first year, then in the second year you add the initial investment plus the interest from the first year and earn interest on the whole amount.

Now that you know the difference, let's see how two people use the force!

Person A starts saving at the age of 25. They start out with a zero balance and contribute $200 monthly until retirement (65). Assuming an average annual rate of return of 12%, Person A can retire with $2,061,941.74. Wow! Millionaire status achieved, two-fold.

Person B starts saving at the age of 40. Because person B is further in life, we'll assume this person started with an initial investment of $10,000 and contributes twice as much, $400 per month, with the same 12% average annual rate of return. Person B will retire at the same age (65) with $886,803.53. Hey, that's not fair! No, that's compound interest at it's finest. J

So, what are you waiting for? Put your pizza and cheeseburger money to better use and start saving! Your love handles will thank you for it!

About The Author

Brian Weiss is owner operator of www.InvestmentRunner.com a specialty search engine with free investors software, spread sheets, investors dictionary, and financial weblog.

admin@investmentrunner.com

---

Time is Money and We Are Running Out of Both!

One of the fundamental principles of finance is the concept that $1 today is more valuable than $1 a year from now.Making adjustments for inflation, the dollar will buy less goods and services... Read More

Planning Starts with the Basics

When developing a plan for your finances, the toughest question often is: "Where do I begin?" Before investing in stocks and bonds or buying life insurance, before implementing any change or making any... Read More

Advice for International Investors on How to Safeguard Their Profits

What are the risks?Today, investors are increasingly turning to global markets to find opportunities for profit, giving urgency to the issue of protecting returns from foreign exchange risk. While there are many excellent... Read More

Help with My Annuity

The cries are heard from the distance, "I need help with my annuities." Nothing has changed...just a lonely senior who can't trust anybody with her annuity because every time she asks for advice,... Read More

Trend Following

Trend following also called momentum trading is the simplest and safest method of stock market investing. It puts you in stocks and mutual funds that are going up and gets you out when... Read More

Seecrets on Investment: Tired of Making Huge Losses in the Stock Market ? Part 1

Over 80% of all individual investors lose money in any given span of ten years. This figure is likely to be higher, given most people's reluctance to reveal their losses. This article provides... Read More

Investing & Online Stock & Share Trading- The Stock & Share Markets are Booming But Be Warned

I had the pleasure of being invited on a friend's yacht to sail in a race on Sydney Harbour yesterday. On board, as one of our motley crew, I met a top ranking... Read More

An Investment Real Estate Strategy Unknown To Most Is A Negative Amortization Loan

If you want to make the most of your personal or investment real estate, you should consider a negative amortization loan. Mortgage amortization is basically mortgage balance reduction. Consequently, when a mortgage has... Read More

Credit Scores = ROI Profits for Real Estate Investors

Strong credit saves real estate investors money on mortgage finance costs. A good credit score, along with the other credit and mortgage qualifications, means that investors can pay lower fees for financing, such... Read More

How to Calculate the Value of Your U.S. Savings Bonds

If you're like many Americans over the age of 55, you've probably had money taken out of your paychecks for years and years in order to purchase U. S. savings bonds. Those bonds... Read More

Getting Started Investing is Often the Hardest Part

There are several reasons people give for not investing their money in things like stocks, bonds, and mutual funds. One reason is that they feel that they don't have enough money to make... Read More

The Real Cost of a Bad Habit

What is the value of a good habit? Think of some daily habits, like brushing your teeth, or buckling a seat belt, or flushing. All of these habits have value important to some... Read More

Stocks: Reduce Risk Yet Maximize Profits

It is important to note that every smart investor wants to minimize risk while maximizing profit potential. Yet conventional investment theory tells us that in order to increase returns, you have to increase... Read More

Why Should I Use Penny Shares to Build Wealth?

A strategic question. Why indeed?1. A penny share would usually refer to a share available for less than $1.00. This makes the aquisition of shares manageable by even the most modest investment budget.2.... Read More

CYA

You all know what CYA stands for. Of course, Cover Your Assets.And everyone does it. You have protection against losing your car in an accident. You have protection against being sued from that... Read More

Can Using Sales Leaseback Method of Investment Property Acquisition Reduce Risk?

Sales Leaseback compared to traditional property investmentCan a Sales Leaseback arrangement make investing in Orlando investment properties more safe and reliable?Yes. Providing a guaranteed rental amount each month is the safest and most... Read More

Investing and the Fear of Regret and Greed

People tend to feel sorrow and grief after having made an error in judgement.Investors deciding whether to sell or buy a security are typically emotionally affected by whether the security was bought or... Read More

Begging Your Trust in Africa

The syntax is tortured, the grammar mutilated, but the message - sent by snail mail, telex, fax, or e-mail - is coherent: an African bigwig or his heirs wish to transfer funds amassed... Read More

Find Your Investing Soulmate on the Jersey Turnpike

As a followup to a previous column, "Irreconcilable Differences," I received an e-mail from a reader asking how she could ensure, ahead of time, investment compatibility with a future spouse.Unfortunately, like most issues... Read More

Volatile Oil

The Light Crude Continuous Contract fell from $67.70 a barrel on Monday to $62.75 on Thursday, and closed at $65.79 on Friday. Consequently, oil stocks followed the sharp move in oil prices last... Read More

Scots Beat Yanks in China Bank Deal

With visions of an ATM in every neighborhood in China, foreign banks and investment firms are queuing up to join the "China Club."Moneybags CommunismThe initiation fee for the "China Club" is straightforward and... Read More

Find a Methodology and Minimize Investment Madness

There are many reasons to be investing these days, and too much opportunity to not have your money working for you.However, I believe the majority of people dread having to deal with investment... Read More

What If You Absolutely Positively Could Not Lose - Would You Play the Stock Market?

Seniors on fixed incomes face a unique problem. Where do they invest their savings to get maximum return on investment with limited risk? Some of the traditional places like CDs and Treasury Notes... Read More

Retire Dollar Smart

Jim Miller is a registered investment advisor. This means that he is not beholden to a particular brokerage or financial institution. As such, he does not charge monthly fees for "money-managing"; instead, through... Read More

Buying Florida Investment Properties and Where Its Hot

Relaxing in Style: Florida Investment PropertiesIn Florida, relaxing in the sun and sand is a way of life. There's no better way to experience a slice of Florida living than buying your own... Read More

Rolling your 401k: Contributory IRA vs. Rollover IRA

In an ideal world you would start your working career with a great company in your early 20s, steadily climb the corporate ladder, retire at age 65, and draw a sufficient income from... Read More

In a Time of Need

As I take my leisurely walk with my dog through the older section of the local cemetery, I pause to read the details on the barely legible, weathered headstones. I am fascinated with... Read More

Trading Systems

A trading system consists of a set of rules for viewing markets and making trades. The advantages of trading systems can be hidden when they become associated with trading platforms involving trade order... Read More

What Is A Fair Market Value, Really? If Youre Going To Trade, Be Sure Its Worth It!

I've been involved in online trading, specifically with stock and index options, for several years. In this time, I've spent a great deal of time thinking about value and the fact that anything,... Read More