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What can happen in an IRA with

The Power of Compounding

Start your IRA early. It pays!

Getting rich slowly--How you could become a millionaire+ for $250 a month

The longer you wait, the more you cost yourself

 

 

AGE

Individual A

CONTRIBUTION

Individual B

CONTRIBUTION

Compounded at 12%* Average Annual Return

Individual A

Individual B

22

$3000

0

3,360

0

23

$3000

0

7,123

0

24

$3000

0

11,337

0

25

$3000

0

16,058

0

26

$3000

0

21,345

0

27

$3000

0

27,267

0

28

0

$3000

30,539

3,360

29

0

$3000

34,203

7,123

30

0

$3000

38,308

11,337

31

0

$3000

42,905

16,058

32

0

$3000

48,053

21,345

33

0

$3000

53,820

27,267

34

0

$3000

60,278

33,899

35

0

$3000

67,512

41,326

36

0

$3000

75,613

49,646

37

0

$3000

84,687

58,963

38

0

$3000

94,849

69,398

39

0

$3000

106,231

81,086

40

0

$3000

118,979

94,176

41

0

$3000

133,257

108,837

42

0

$3000

149,247

125,258

43

0

$3000

167,157

143,649

44

0

$3000

187,216

164,247

45

0

$3000

209,682

187,317

46

0

$3000

234,843

213,155

47

0

$3000

263,025

242,093

48

0

$3000

294,588

274,504

49

0

$3000

329,938

310,805

50

0

$3000

369,531

351,462

51

0

$3000

413,875

396,997

52

0

$3000

463,540

447,997

53

0

$3000

519,164

505,116

54

0

$3000

581,464

569,090

55

0

$3000

651,240

640,741

56

0

$3000

729,389

720,990

57

0

$3000

816,916

810,869

58

0

$3000

914,945

911,533

59

0

$3000

1,024,739

1,024,278

60

0

$3000

1,147,708

1,150,551

61

0

$3000

1,285,433

1,291,977

62

0

$3000

1,439,685

1,450,374

63

0

$3000

1,612,447

1,627,779

64

0

$3000

1,805,941

1,826,473

65

0

$3000

2,022,654

2,049,009

 

 

Example contains two individuals who contribute to their Individual Retirement Account (IRA). Individual A started at age 22 and contributed $3000 a year until age 28 and stopped (total outlay-$18,000). Individual B started at age 28 and had to contribute $3000 a year all the way until age 65 to equal the same amount upon retirement at age 65 (total outlay-$111,000). Projected returns are based upon an average return of 12% compounded annually. Over 20-30 years, historical average return in a properly diversified portfolio of stocks is roughly 10-12%. Past performance does not guarantee future results. For illustrative purposes only.

 

 

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