See the magic of compound interest.
When it comes to building a solid nest egg for retirement, there are a billion things to consider. When will you retire? Where will you live? What type of lifestyle would you like? What will your Social Security benefits be? Will Medicare be around? The list goes on and on.
If having a retirement account worth $1 million will meet your retirement needs, you can see if you’re on the right path. Personal finance blogger Zach of Four Pillar Freedom created an easy-to-read chart. It assumes you’ll receive a 7% annual return on your investment and that you’re starting with nothing in your savings account.
The chart’s big lesson is that everyone should start saving early and let compound interest work its magic. Those who begin in their 20s have a huge leg up on those who start in their 40s. The best way to build a solid retirement savings is to make automatic contributions to your account each month and to take advantage of employee matching programs.
When contributions are automatic, you’ll be less likely to miss the money and might be pretty surprised at how much you can sock away each year.