This tool demonstrates the advantage of starting to save early. It calculates the difference in retirement balances for people who save the same amount each year and earn the same return, but one save starts early and the other procrastinates. For example, a 25 year old person who starts saving $2,000 each year and earns 10% return, will have $975,704 at the retirement age of 65. However, if they delay saving for 10 years to age 35, they will only have $363,887 at age 65. The difference is $611,817. Also, refer to the “Pay Me Now or Later” tool for a similar tool, which allows you to vary the amounts and contributions each year. |
No script is provided for this screen. |
The tool uses two simple investment spreadsheets to solve for the future value (for each year from the current age to retirement age) for the given assumptions. Both the retirement balances and the projected retirement income may be displayed. This tool displays an extra row (year) at the bottom of the Documentation spreadsheets. This provides additional information by displaying the first year of retirement. The values displayed by the program are from the beginning of the year, as opposed to end of year values. For example, if a 35-year-old person starts saving at the beginning of each year and plans to retire in 30 years, they will have worked 30 years at the beginning of age 65. Their savings occurred from age 35 to 64 (inclusive), the 65th year (row) is just for information purposes. |