By Martin Weil
Learn more about Martin on NerdWallet’s Ask an Advisor
If you do nothing else about your retirement, start saving early. You should also save a lot and stay out of debt.
This is the best advice possible from Above the Market and much the same as my own tax person told me when I was 20-something, a long time ago. The sooner you start, the easier it is to save a lot of money. The author’s simple demonstration shows that a person saving $2,000/yr. starting at age 19 for just 7 years will achieve the same sum by age 65 as a person who instead waits to start saving until age 26 but makes annual $2,000 contributions for the next 40 years. 7 years of contributions will equal 40 years’ worth, the full effect of long-term compounding. Counterintuitive for sure, which is why of course, I knew better at the time. And I suspect why many 20-somethings will today.
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