Why It pays to Start Early

Saving for Retirement In Your 20s–30s

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Time may be your greatest advantage as a young investor. The earlier you start saving for retirement, the more time your money has to grow. Even small contributions in your 20s can have a significant impact on your retirement savings over time.

THE POWER OF STARTING EARLY

The value of starting early

Compare two investors who each save $5,000 per year. The early starter saves for just 10 years, from ages 21–30. The late starter saves for 35 years, from ages 31–65. Despite contributing far less overall, the early starter ends up with a significantly larger projected balance thanks to the power of compounding.

Both savings paths

Compare ages 21–30 with ages 31–65

Annual savings
$5,000
Years contributing
10 vs. 35
Total contributions
$50,000 vs. $175,000
Projected value at age 65
$1,132,541 vs. $595,604
$536,937 More projected value for the early starter
Projected savings value by age The early starter contributes from ages 21 through 30 and reaches a projected 1,132,541 dollars at age 65. The late starter contributes from ages 31 through 65 and reaches a projected 595,604 dollars. The early starter has 536,937 dollars more projected value.

Source: PGIM. Assumptions include 6% annual return. Not indicative of an actual investment; for illudtrative purposes only.

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