Importance of Saving Early

How It Works

The calculator below estimates savings at age 65, assuming a 10% savings rate starting at age 25 and compares that result to starting at later ages.

It also calculates the savings rate required at later ages to produce the same outcome as the default scenario (saving 10% at age 25).
Savings are also broken out by source: Your own contributions versus investment returns.

The default comparison shows that someone starting at age 50 would need to save 43% of pay to catch up and produce the same result as someone saving 10% starting at age 25.
A person who starts saving at age 25, should expect about three quarters of savings to come from investment returns. In contrast, when starting at age 50, only 40% of savings come from investment earnings.
What this means: If you start saving at age 50 instead of age 25, you lose 88% of the investment returns, despite making 54% of the contributions.
Key take-away: For savings-based programs to be efficient, it is imperative that workers participate at young ages.
Assumptions: These figures assume retirement at age 65 and pay increases of 3.5% per year. It also assumes continued savings until age 65 and no loans or withdrawals taken before retirement. The savings rate represents all contributions (worker's + any employer match). You can adjust the other key assumptions.

Age Savings Begins

Pay at Start of Career

Investment Return

If you start saving at age

instead of age 25

you would have to save

20%

of pay to reach the same level of savings

Start saving at 50

Start saving at 25

$228,002

$422,751

$150,661

$1,205,929

$378,663

$1,628,680

40%

74%