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A Million-Dollar Secret Every Millennial Should Know

Think you’re too young to think about retirement? We’re here to let you in on a little secret: If you’re in your 20s, that mindset could cost you millions—yes, millions—of dollars.

Got your attention? Good.

When you’re young, you have a rare opportunity to make loads of money without a ton of effort. It all comes down to one thing: compound interest. Let’s explore a few examples of just how powerful it can be.

What Does It Take to Reach $1 Million?

Lots of folks dream about retiring with a million dollars by the time they turn 65. So how much do you need to invest to reach that lofty milestone?

Start investing when you’re 25, and you could hit your retirement goal—perhaps even break the $2 million mark—with just $200 a month. That’s less than half of the average car payment!

And the best part is only $96,000 of that million-dollar nest egg comes out of your own pocket. You can thank compound interest for the rest!

So what happens if you delay your retirement savings for a decade or two?

  • Wait until your 35th birthday, and you’ll have to shell out $500 a month to reach $1 million. You’ll also pay almost twice as much out of your own pocket by the time you retire.
  • Hold off until you’re 45, and the gap grows even wider. You’d have to contribute seven times more each month, funding nearly a third of your nest egg yourself.

But What If You Aim Higher?

Now, that’s the minimum you’d need to contribute to retire a millionaire. But if we’re peering 40 years into the future, you’ll likely need more than a million bucks to live comfortably in retirement.

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So what if you bumped your monthly contribution up to $500 a month? That’s 15% of a $40,000 salary. You could end up with $3–5 million at retirement. Think of all the living and giving you could do with that kind of nest egg!

Compare that to what you’d have if you invest the same amount—only later. Procrastinating could cost you anywhere from $2–4 million! That’s a quick way to take the shine out of your golden years. 

Of course, these calculations assume you continue investing until the day you retire. If you want to make the most of your retirement fund, you’ve got to keep your hands off your nest egg, no matter what the market’s doing. The S&P 500—a standard measurement of stock market performance—has seen its share of ups and down over the past 30 years, and it’s averaged a 12% growth rate.

Get Serious About Your Future Today

According to a recent study by Wells Fargo, 80% of Millennials came out of the Great Recession knowing how important it is to save for the future. Yet, only 55% actually put that lesson into action by investing toward retirement. That’s not good enough!

Look, it doesn’t matter if your career’s just getting off the ground and retirement feels eons away. Waiting even just a decade to invest in your future could cost you millions of dollars. Are you really willing to walk away from that kind of money?

Don’t lose out on an awesome future just because it feels far away now! Try this free and easy way to find an investing professional in your area. 

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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