Start Saving as Early as Possible

The sooner you start saving, the better. That’s because the earlier you start, the more time and potential your retirement savings will have to compound. In other words, “make money on your money”!

“If you are age 30 today and invest $600 a month from now to age 65, if your investments earn an average return of 7% a year, by age 65 you’ll have $1 million,” said Dana Anspach, founder and CEO of financial planning firm Sensible Money. “If you’re starting at age 40, you’ll need to be able to put away about $1,300 a month to get to $1 million by age 65 — still assuming a 7% return.”

On the other hand, if you start saving at age 20, you could keep your monthly savings to no more than $300 and successfully reach $1 million by age 65, assuming a 7% annual return. The more you wait, the more you need to save to make up for the lost time.