Compound Interest & Retirement Planning
Compound interest is one of the most powerful tools for building a secure retirement. The earlier you start saving and investing, the more time your money has to grow exponentially.
Why Compounding Matters for Retirement
- Small, regular contributions can grow into a large nest egg over decades.
- Interest earns interest, so your savings accelerate as time goes on.
- Delaying saving means missing out on years of potential growth.
Starting Early vs. Starting Late
Example: If you invest $200/month at 7% starting at age 25, by age 65 you’ll have about $525,000.
If you start at age 35, you’ll have about $244,000—less than half, even though you invested for only 10 years less!
If you start at age 35, you’ll have about $244,000—less than half, even though you invested for only 10 years less!
Tips for Retirement Planning
- Start saving as soon as possible—even small amounts make a big difference.
- Increase your contributions as your income grows.
- Take advantage of employer retirement plans and tax-advantaged accounts.
- Let your investments grow—avoid withdrawing early if possible.