What This Article Answers
This article shows how a 10-year delay affects long-term outcomes, even when contribution amounts stay the same. It explains the cost of time using simple math rather than motivation or advice.
Assumptions
- Monthly contribution: $500
- Annual return: 7%
- Contributions made monthly
- Time horizon: age 25–65 vs 35–65
- Returns compounded monthly
The Outcome
Starting at 25 instead of 35 results in over $600,000 more at retirement, despite only contributing $60,000 more.
Breakdown
| Scenario | Years Invested | Total Contributed | Ending Balance |
|---|---|---|---|
| Start at 25 | 40 | $240,000 | ~$1,280,000 |
| Start at 35 | 30 | $180,000 | ~$680,000 |
Why This Happens
Compounding accelerates over time. Early contributions spend more years growing, and later growth dominates total balance. The final decade contributes more growth than the first two decades combined.
Variations to Consider
- Increasing contributions later to “catch up”
- Higher or lower market returns
- Employer matches starting later
- Gaps in contributions
Key Takeaways
- Time is more powerful than contribution size
- Delaying investing is extremely expensive
- Growth dominates outcomes, not savings rate