What This Article Answers
This article shows how gradual increases in contributions affect long-term outcomes compared to a flat contribution rate.
Assumptions
- Starting contribution: $300/month
- Annual increase: 3%
- Flat comparison: $500/month
- Annual return: 7%
- Time horizon: 30 years
The Outcome
Gradually increasing contributions produces nearly the same outcome as contributing $500 from the start.
Breakdown
| Strategy | Total Contributed | Ending Balance |
|---|---|---|
| Flat $500 | $180,000 | ~$680,000 |
| Gradual increase | ~$165,000 | ~$650,000 |
Why This Happens
Later contributions benefit from higher income but less compounding time. Early consistency matters more than early intensity.
Variations to Consider
- Faster raises
- Job changes
- Paused contributions
- Employer matches
Key Takeaways
- Consistency beats perfection
- Growth timing matters
- Increasing contributions later still works