Are you in your 40s and worried that you blew it and are too late to achieve a comfortable retirement? Think again. Even those who start late may be able to amass a sizable nest egg.
Here's what you might do to strengthen your financial condition if you're starting in your 40s, or even at some younger or older age. The table below shows what's possible -- how your nest egg might grow, at an annual average rate of 8%. (I used 8% to be a bit conservative, since the stock market has averaged annual returns of close to 10% over many decades, and in the coming decades, the market may well grow at a slower (or faster!) rate.)
|
Growing at 8% for |
$7,500 invested annually |
$15,000 invested annually |
|---|---|---|
|
5 years |
$47,519 |
$95,039 |
|
10 years |
$117,341 |
$234,682 |
|
15 years |
$219,932 |
$439,864 |
|
20 years |
$370,672 |
$741,344 |
|
25 years |
$592,158 |
$1,184,316 |
|
30 years |
$917,594 |
$1,835,188 |
|
35 years |
$1,395,766 |
$2,791,532 |
|
40 years |
$2,098,358 |
$4,196,716 |
Source: Calculations by author.
If you're 45 now and are able to work until age 75, that's 30 years of saving, investing, and growth ahead of you. Even if you retire at 65, you have 20 years. Remember that your earliest invested dollars are your most powerful ones, as they have the most time in which to grow -- so save and invest aggressively.
You might not want to choose risky, aggressive investments, though. Instead, you can do quite well sticking with a simple, low-fee index fund such as the Vanguard S&P 500 ETF (VOO -0.42%). There are other powerful index funds to consider, as well.
Image source: Getty Images.
Consider taking on a side gig for a few or many years, as that can help you sock away more money. And know that while delaying your retirement may not be a welcome thought, it's a powerful move. It can help you save on health insurance costs, get bigger Social Security checks, and end up with a bigger retirement fund.
