The Most Important Retirement Table You'll Ever See

One of the luckiest financial things to happen to me was that in my late 20s, I was shown a table depicting how money can grow over time. It was very eye-opening to me, and it inspired me to save and invest. Now, decades later, I'm experiencing the kind of magic depicted in the table -- the amazing phenomenon of compounded growth.

Whether you are young like I once was or you're now in your 50s or beyond, you too can get inspired by the most important retirement table you'll ever see.

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The most important retirement table you'll ever see

Below is a table showing how much you might amass over time if you sock away certain sums regularly for long periods:

Source: Calculations by author.

Here are two key things to keep in mind regarding the table:

• You can obviously invest smaller or larger sums than the ones above, and over time you probably will. As you age and (ideally) earn more, you can sock away larger and larger sums -- which can help you amass vaster sums more quickly.
• Your invested money might grow at a faster or slower rate than 8%. The S&P 500 has averaged returns of roughly 10% over long periods, but there are also plenty of periods with lower returns. (You might try to juice your returns by investing in some growth stocks -- but that's not a guaranteed strategy.)

Be sure to notice how much more powerfully money grows in later years. That's demonstrating how effective it is to invest for the long term. Big bucks tend to arrive after a few decades.

Investing effectively

It's also important to be investing effectively -- not too conservatively, such as in low-yielding savings accounts, or too recklessly, such as in penny stocks. It's hard to beat the stock market for long-term wealth building, and the simplest way to invest in stocks is just via low-fee index funds. An index fund invests in pretty much the same securities in the index it tracks -- such as the S&P 500 -- so it delivers close to the same returns.

Given how the stock market tends to grow and grow over decades, it's hard to not make money if you keep plowing dollars into the stock market regularly over a long period. You do need to be diligent about it and not get discouraged and give up when the market slumps, as it does now and then.

If you haven't saved enough

Not everyone has decades before retirement, though. If retirement is on the horizon for you and you feel that you haven't saved enough, you do have a few strategies you might employ.

For starters, consider delaying your retirement by a few years if you can, because that can be a surprisingly effective move. By doing so, you'll obviously be able to save and invest for more years -- and those are years in which your nest egg won't have to help support you, allowing it to keep growing bigger instead of smaller. You may also get to remain on your employer's health insurance plan, which could save you money. And the longer you delay starting to collect Social Security, the bigger your ultimate benefit checks will be.

You might also aim to beef up your income as much as possible before retiring. Depending on how many years you have, you could work to earn a professional designation or certificate that could qualify you for higher-paying jobs. You might simply ask for a raise at your current job, too -- because such requests are granted more often than many people think. (It helps to deserve a raise, of course.) Taking on one or more side gigs for a while can also generate extra dollars that can be invested.

So don't despair if you're behind in saving and investing for retirement. Read up on the topic and on retirement income strategies you might employ, as there might be some, such as reverse mortgages, that you hadn't thought of or don't even know about. And consider consulting a financial advisor, as well.