Financial FitnessGeneral Information

When Should I Start Saving?

By May 9, 2019 No Comments

What is the average age to start saving?

According to Nationwide Retirement Institute, a November 2018 survey of 1,161 employed adults determined that the average age which this group began saving for retirement was 31 years old.  The most common reason for not starting sooner was they didn’t make enough money.

When I read this, it was very disturbing to me.  The reason is: if people understood the implications of starting early or compound interest, I think most people would start early.  Let me give you an example.  If an individual just started putting away $200 a month at age 31, which was the average age of the surveyed, that’s $2,400 a year.  If they started at 31 and averaged an 8% return — the stock market has averaged 10%, but let’s just assume an 8% return — at the end of the 34 years they would have invested a total of 81,600.  But compounded, it would be worth $421,300.  So, they gained $339,700.

What happens if I start earlier?

However, if they had started 10 years earlier at age 21 putting away $200 a month at 8%, they would be investing for 44 years.  Their total investment would be 105,600, but that original $200 at 8% compounded over 44 years would actually be worth $971,700.  Over $550,000 more just by starting at age 21 versus waiting until 31.  How much additional investment date of death the 21-year-old make?  Their total investment was 105,600, compared to age 31 that was 81,600.  So, the 21-year-old invested an additional $24,000, but ended up with $550,000 more.

Now you can see why it’s important to start at a young age investing, regardless of how much it is that you’re contributing.  Even if it’s just $50 or $100.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly. 

Stock investing involves risk including the loss of principal. 

These are hypothetical examples and are not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.