Most young adults don’t buy into the idea that they will be able to save $1 million by the time they retire, according to a recent Wells Fargo study on millennials. And just six in ten of that same group have even started tackling saving for retirement.
Are you one of those millennials? Have some faith! Time is on your side, and it can be your best friend when trying to build wealth. Here's how Wells Fargo breaks down the math of how a saver starting with a salary of $32,000 at age 25 can reach $1 million in savings by retirement age.
The truth of the matter is that few people get rich from their wages alone. But by investing your retirement savings in a workplace savings account like a 401(k) or an Individual Retirement Account, and taking advantage of compound interest, almost anyone can reach their long-term financial goals.
What is compound interest, exactly? It means earning interest on your interest over time. And because millennials are at the beginning of their career with many years left before retirement, they are in the best position to save money and grow that savings.
To demonstrate the miracle of compound interest, let’s compare two savers, Shauna and Jorge. Shauna begins saving $400 each month at age 25 and Jorge begins saving the exact same amount of money at age 35. This chart, which assumes a 7% annual return on stock market investments, illustrates the difference in their savings over time, not accounting for fees or changes to the market. Shauna contributed just 25 percent more, but ends up with more than twice as much as Jorge.
Now that you know you need to save for retirement, let’s put a plan in place. After all, savers with a plan are twice as likely to save successfully. That’s where America Saves and our pledge comes in. We’ll help you choose an amount to save for retirement each month. Then we’ll keep you motivated with retirement-focused tips, information, advice, and reminders to help you reach you reach your retirement goal. Think of us as your own personal support system.
Yes, you can save $1 million by the time you retire with miracle of compound interest: http://bit.ly/2c4biCV @AmericaSaves
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