A 20 Year Old Could Need to Save $7 Million for Retirement

By Mandi Woodruff
Courtesy of Yahoo Finance

Full Article here

Cliff Notes (C’mon its 13 bullet points you can read this):

• 20 somethings don’t save money for two reasons:
  • “There are bills to pay, debt to be tackled, apartments to rent, and social lives to be had.”
  • They think that their money is better served in their pockets now.
• Due to inflation, a 20 something will need $7,000,000 at retirement!A 25 year old making $50,000 would need to save 14.65% of their salary througout their career.
  • In 1970, someone could have retired with just $166,000.
  • Today, someone needs around $1,000,000.

• TIME IS ON YOUR SIDE!
• Saving 6% of your pay at 25 is much more valuable than saving 8% at 55.
• Case Study:IF you decide to invest while you are younger you stand to have a significant amount more at retirement and “people who do that earlier set themselves up much better for success.”
  • Jennifer, 22, making $3,000 a month, saves 5% of her salary in a 401(k) with a 5% employer match ($300 a month). She earns 6% at year on her investment and ends up with $753,849 at age 65. (assuming she never increases her contribution or gets a raise)
  • Jennifer decides not to invest young, instead she waits till she moves up in the company and is making $6,000 a month ($600 a month) but is now 35. Same savings of 5% with 5% match and same investment, at 65 she has $317,843. She lost out on $436,000 by waiting!!!

*Note: We do not own Cliff Notes or have any relation with them with are just using them as an example of a book synopsis company.