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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 about $333 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

$4000

0

4,480

0

23

$4000

0

9,497

0

24

$4000

0

15,117

0

25

$4000

0

21,411

0

26

$4000

0

28,460

0

27

$4000

0

36,356

0

28

0

$4000

40,718

4,480

29

0

$4000

45,604

9,497

30

0

$4000

51,076

15,117

31

0

$4000

57,205

21,411

32

0

$4000

64,070

28,460

33

0

$4000

71,759

36,356

34

0

$4000

80,370

45,198

35

0

$4000

90,014

55,102

36

0

$4000

100,816

66,194

37

0

$4000

112,914

78,618

38

0

$4000

126,463

92,532

39

0

$4000

141,639

108,116

40

0

$4000

158,636

125,570

41

0

$4000

177,672

145,118

42

0

$4000

198,993

167,012

43

0

$4000

222,872

191,534

44

0

$4000

249,617

218,998

45

0

$4000

279,571

249,758

46

0

$4000

313,119

284,209

47

0

$4000

350,694

322,794

48

0

$4000

392,777

366,009

49

0

$4000

439,910

414,411

50

0

$4000

492,700

468,620

51

0

$4000

551,824

529,334

52

0

$4000

618,043

597,335

53

0

$4000

692,208

673,495

54

0

$4000

775,273

758,794

55

0

$4000

868,306

854,330

56

0

$4000

972,502

961,329

57

0

$4000

1,089,203

1,081,169

58

0

$4000

1,219,907

1,215,389

59

0

$4000

1,366,296

1,365,716

60

0

$4000

1,530,251

1,534,082

61

0

$4000

1,713,881

1,722,652

62

0

$4000

1,919,547

1,933,850

63

0

$4000

2,149,893

2,170,392

64

0

$4000

2,407,880

2,435,319

65

0

$4000

2,696,826

2,732,037

 

 

Example contains two individuals who contribute to their Individual Retirement Account (IRA). Individual A started at age 22 and contributed $4000 a year until age 28 and stopped (total outlay-$24,000). Individual B started at age 28 and had to contribute $4000 a year all the way until age 65 to equal the same amount upon retirement at age 65 (total outlay-$148,000). 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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