When it comes to retirement planning, it’s never too early to start saving. Show your clients how the more you invest and the earlier you start, the more time your retirement savings will have potential to grow. These talking points can help you start the conversation. 

Time matters

• The key engines that drive the unique opportunity for savings growth within a retirement plan are tax deferral and compound interest.
• The money you’ll invest is tax-deferred (assuming you are considering enrolling in a tax-deferred, employer-sponsored retirement plan or a deductible individual retirement account), which means taxes are not payable until you withdraw the money from your account.
• Thanks to compound interest, the money you would have otherwise paid toward income tax remains in your account to earn more money. If you only contribute even a modest amount over time, you may be surprised at how much it could grow.
• For example, just $50 a month could generate as much as $75,000 over 30 years.

Growth potential of a regular contribution

The high cost of waiting

•  Waiting to start your long-term savings program can have a major impact on your retirement saving outcome.
• Time and the potential for compound earnings matter. For example, here’s a scenario that could make a significant difference in your outcome.¹ 
  Assume:

o   You earn $30,000 a year, receive 4% annual raises and plan to retire in 30 years.

o   You save 4% of your salary a year and earn an 8% annual return.

• If you start investing today, you could have more than $220,000 by the time you retire.
• If you wait five years before starting, you’d have $164,878 (assuming the same retirement date, salary, raises, savings rate and return).
• Waiting five years could cost you $56,066.