Have you ever had the thought: “I’ll start saving for retirement when I make more money!”

Well, we all have…

I want to show you why that’s a bad idea.

In our business we often see what we call 401k millionaires. 401k millionaires are exactly what you may think; they have over $1 million dollars in their 401k. There is almost always one thing I can guarantee about these savers…. they started early.

In fact, it is not uncommon to see those who make less money, yet start early, have much higher balances than the most highly compensated employees at a company.

Why is this the case? Simple. As Einstein once said, compound interest is the 8th wonder of the world.

Take a look at the chart below. It details the first 20 years of an average worker’s saving. If we assume a 6% annual rate of return and age 67 as your retirement age (yes millennials, the government now assumes you work that long), we can see that it takes over 3x the amount of monthly saving at age 40 then it does at 23 to reach $1 million.

SO what’s the moral of the story here? Easy. Make saving a part of your paycheck a fixed monthly expense and do it early. Your future self will thank you.

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