“Time is your best friend,” said Peter Creedon, CFP with Crystal Brook Advisors.
“For example, a 35-year-old that invests $5,000 per year in an IRA for 33 years at 8 percent should have approximately $729,750,” he said. “Meanwhile, a 50-year-old that invests $15,000 per year into a 401k for 18 years at 8 percent should have approximately $561,753.”
To break that down, the investor who started at age 35 had to save $105,000 less over the course of his investing life to earn over $165,000 more. “This is simply the time value of money,” said Creedon.