The early savings bird can get more worms in retirement. The tale of twin brothers.


There were twins bothers, let’s call them Matt and Marc. Their uncle encouraged them to start saving and investing at an early age. Matt jumped on this advice right away and at age 21 he started contributing $5,500 to his Roth IRA every year. He did this for 10 straight years until he was thirty. He then decided he had enough saved for retirement and wanted to spend more money on his family. He did not contribute anymore to his retirement fund.

His brother Marc waited ten years to act on his Uncles advice but at age 31 he began putting $5,500 a year into his Roth IRA and did so every year until he retired.

Both brothers retired at age 65. Marc had taken a total of $192,000 out of his hard earned pay over the span of 35 years and put it toward his retirement. Matt only took a total of $55,000 out of his pay to put toward his retirement over a ten year period. They both got good advice from their uncle on how to invest the money and enjoyed an average rate of return of 8% over the years.

Matt had $1,272,281.55 in his tax free retirement account. Even though he saved for many more years and put more money into savings account Marc had less money than his bother but still a respectable $1,023,561.81. Matt had earned $1,272,281.55 in tax free money over the years while Marc had earned $831,061.81 in tax free money.

The moral of the story: the earlier you start the better but latter is better than never. If you start early enough your money invested properly will do most of the heavy lifting and provide much more for your retirement than your actual savings will.

The second moral of the story: if Matt kept up the savings for all 45 years he would have $2,295,843.37. So not only could he buy more worms he could by top end fishing gear and a really nice boat in his retirement so he could put all those worms to good use!

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