Saving a little now, versus saving a lot, later…
By John C. Burris PFP, RIA
We often get asked whether it makes sense to hold off saving until student loans are paid off, or to balance debt-payoff and savings at the same time. While each person’s circumstances will vary, the math shows that starting early, even with a little bit, can be much more beneficial than starting late with much more.
To demonstrate, let’s look at ‘Plan A’ and ‘Plan B’: The client in ‘Plan A’ started to put $100 into savings monthly at age 25, and the client in ‘Plan B’ started putting $350 into savings monthly at age 45. Both earned 5% interest per year and stopped contributing when they turned 65.
The client who started at age 45 contributed much more money from their own pocket, but ended up with less money saved than the 25-year-old. It’s never too late to start, but the power of time certainly creates an incentive to balance both goals at a younger age, if possible.
Contact our team if you would like to review your plan and how to maximize your savings, regardless of your age.
Mutual funds and/or approved exempt market products are offered through Investia Financial Services Inc.
“It’s never too late to start, but the power of time certainly creates an incentive to balance both goals at a younger age.”
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