The Real Cost of Waiting to Save for Retirement
Life + Money

The Real Cost of Waiting to Save for Retirement


When you’re young and not making a lot of money, it can be easy to put off saving for retirement, with the thought that you’ll get to it in a few years when you’re in a better position to do so.

That kind of thinking, however, has real dangers: It could leave you with far less money in retirement than you think.

Related: The 5-Decade Plan for a Successful Retirement

Workers contributing 10 percent of their income to a retirement plan each year, beginning at age 35, will end up with 11 percent less in annual retirement income than workers who start stashing money away at age 30, according to a new analysis by the Insured Retirement Institute, a trade group.

Over the course of a 25-year retirement, delayed savers would have accumulated $62,000 less than early savers. And think of this: If workers wait until age 40 to start saving, they’ll have 23 percent less cash – about $127,000 less over 25 years – to use during retirement.

Related: A Written Retirement Plan Can Double Your Savings

“There’s no lost and found for retirement savings,” IRI CEO Cathy Weatherford said in a statement. “Delaying retirement will only partially recover lost savings, and may not even be feasible for some workers.”

Workers who start saving later can make up the difference but only if they save a lot more: A worker who starts contributing at age 35 would need to save 16.5 percent of his income, and at age 40 he’d need to save more than 26 percent of his income to have the same amount as if he had begun saving 10 percent at age 30.

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