Here's What Happens When You Contribute $5,000 to an IRA at Age 35

Your mid-30s may be an interesting period of life from a financial standpoint. At that point, there's a good chance you have a decade or more of work experience under your belt. That means you may be in a position where you're finally earning a higher salary.

On the other hand, you might have your share of expenses as a 35-year-old. If you own a home, your ongoing mortgage payments may be eating up a fair share of your income. And if you have young kids, you may be spending a large chunk of your paycheck on childcare just so you can hold down a job.

As such, it's easy to see why saving for retirement at age 35 may not seem so feasible. But if you're able to make a nice contribution to your IRA at age 35, it could go a long way toward setting you up for a comfortable retirement down the line.

When a single contribution goes a long way

Funding your IRA is, ideally, something you should aim to do every year in your 30s (and every year in general). But you may be surprised at how effective a single $5,000 IRA contribution is in your mid-30s.

In fact, let's assume that you not only make a $5,000 IRA contribution at age 35, but that you invest your retirement savings in stocks. Over the past 50 years, the stock market has delivered an average annual 10% return before inflation, as measured by the performance of the S&P 500. Assuming you enjoy that same return, and that you don't retire until age 65, you'll grow your $5,000 contribution at age 35 to a pretty impressive $87,000. That's an $82,000 gain.

Now is $87,000 enough money to retire on? Probably not. Even if you're willing to lead a relatively frugal lifestyle, you'll probably want more money than that to use throughout your senior years.

But is $87,000 a nice start to your retirement nest egg? Absolutely.

In fact, let's say you make a $5,000 contribution to your IRA at age 35 and then don't manage to stick another dollar into that account for 10 years. If, between the ages of 45 and 65, you manage to save $300 a month for retirement, all the while generating an average annual 10% return on your investments, you'll end up with a nest egg worth about $293,000.

Do what you can to fund your IRA

It's not easy to fund an IRA when you're at an age where your earnings haven't yet peaked and you have many expenses to contend with. But the younger you are when you start making IRA contributions, the more wealth you stand to build for retirement over time.

As such, it pays to push yourself to find the money for your IRA. And if you can't manage that every single year during your 30s, at least try your best to make a nice, robust contribution at one point during that pivotal decade of life.