One of the scariest aspects of saving for retirement is not knowing how much your savings will ultimately grow to. After all, there are numerous factors that will come into play to dictate your eventual savings balance, such as the number of years you give yourself to save, the amount you contribute each year, and the way you invest your savings.
The good news, however, is that if you make a point to save 10% to 20% of your salary from an early age, and you invest your savings wisely, there’s a good chance you’ll accumulate enough to live a perfectly comfortable lifestyle when you’re older. And, if you save for retirement with a tax-advantaged account, like a 401(k), 403(b), 457 plan, or traditional or Roth IRA, your contributions will get to grow tax-deferred or tax-free, thus giving you even more opportunity to amass a sizable nest egg.
Let your investments do the work
If your goal is to accumulate a pretty substantial nest egg — heck, let’s say $1 million — in time for retirement, then you really have two choices: You can hold off on saving and sink a large chunk of your salary into a retirement plan later in life, or you can start early and turn a bunch of small, painless contributions into a whopping sum over time. Clearly, it pays to go with the latter, because, frankly, it’s a far less intrusive way to save.
If you get in the habit of saving a portion of your salary early on and continue to ramp up your contributions over time, you’ll grow your nest egg by putting your…