The Cost of Waiting
It's never too soon to start thinking about retirement and begin your retirement nest egg. Social Security and employer-sponsored pension plans, if you and/or your spouse are enrolled in one, may only provide a portion of the income you will need down the road. No matter what stage of life you are in, saving for retirement should be a priority. In fact, when you start saving may be more important than how much you save.

Nancy, Jason, and Amanda: A Comparison of Savings Strategies
This hypothetical illustration* shows three 25-year-old employees – Nancy, Jason, and Amanda – who each saves $2,000 a year and earns a seven percent rate of return. Each starts saving at a different age and/or for a different period of time:

• Nancy begins now, saves for 10 years, and then stops at age 35.
• Jason delays until he turns 35 and then saves for 30 years until he is 65.
• Amanda starts now, and continues her savings contributions until age 65, for a total of 40 years.

*Assumes for illustrative purposes only a seven percent rate of return and tax-deferred compounding. The rate of return is not indicative of the performance of any investment. No product charges, expenses, or taxes are included; if included, they would reduce the returns.

Even though Jason contributes three times as much money as Nancy, he would actually retire with almost $23,000 less than her because Nancy started saving 10 years earlier and has the power of compounding working for her. Amanda, however, comes out on top as the real winner: She will retire with as much money as Nancy and Jason combined.

Waiting Two Years to Save Can Cost You More Than You Think
When we are young, retirement seems a long way off. It's easy to think that there is plenty of time to save for retirement. That may be true, but waiting to save also has a cost.

Consider the retirement savings scenarios below. This time imagine being able to save $3,000 a year instead of just $2,000. From the totals below, you can really see the impact of a savings an extra $1,000 per year. Not only that, the difference between starting your retirement savings at age 27 instead of 25 could mean a loss of nearly $87,000 by the time you reach age 65. These comparisons help to illustrate the impact of putting compounding to work for yourself as early as you can.

Do your own comparisons on our Cost of Waiting Calculator to see how waiting can hinder your retirement.

**Assumes for illustrative purposes only an annual contribution of $3,000, a seven percent rate of return, and tax-deferred compounding. The rate of return is not indicative of the performance of any investment. No product charges, expenses, or taxes are included; if included, they would reduce the returns.

Note: The above information is not intended or written to be used as investing, legal, or tax advice. It was written solely to support the sale of annuity products. As a taxpayer, you cannot use it for the purposes of avoiding penalties that may be imposed under the tax laws. You should seek advice on investing, legal, or tax questions based on your particular circumstances from an independent financial professional, attorney, or tax advisor.

All calculations shown are for comparison purposes only to help you understand the relative productivity of present and future investment scenarios. All calculations are hypothetical in nature. They are based on the assumption that the type of investment vehicle, current tax and other laws, and annual cash outlays all of which are subject to change, will continue unchanged for the stated number of years. It is not likely nor is it represented or warranted that you will achieve the exact same results illustrated in the foregoing calculations.

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