One Year, $1 Million
Wed 23 Apr 2008 – 13.41
I’ve talked about this before, but it never hurts to hammer home the message: start saving for retirement, my friends! In fact, a recent article from Yahoo! Finance concludes that you can become a millionaire simply by stashing money in your 401(k) and Roth IRA, if you start at age 26.
In 41 years of compounding at 10% annually, $20,500 ($15,500 in a 401(k) and $5,000 in an IRA) will turn into $1 million. And you’ll never have to contribute another dime.
The math is a bit more complex, I imagine, but the point is sound — saving now makes for a big payday later. The trouble is having the excess cash to put away. Most twentysomethings are struggling to pay the rent and have a bit left over for a pint or two, so it doesn’t seem entirely possible to set aside $20k. I suppose the best way is to ease into it. Try setting aside $200 from each paycheck, then try to set aside $300. Eventually, you’re only using half of what you make. Or something.
posted by Scott in careers, personal finance.
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