Maybe you’ve done the calculations already and decided you can’t possibly save all the money you’ll need for future goals, such as your children’s college education and your own retirement. So, you’ve just kind of given up, at least for now. Or maybe you are saving, but have no plans to increase the amount you’re setting aside because your paycheck is already stretched thin. Either way, you probably can do more if you really think about it.
The strategy is not to think too big. Saving very little - just 1% more of your income each year - can yield good results over time, as the chart below illustrates.
Yearly Savings
| 1% of |
10-Year Accumulation |
20-Year Accumulation |
30-Year Accumulation |
$30,000
|
$4,574
|
$14,726
|
$37,259
|
$40,000
|
$6,098
|
$19,632
|
$49,674
|
$50,000
|
$7,623
|
$24,544
|
$62,103
|
$60,000
|
$9,147
|
$29,451
|
$74,518
|
$70,000
|
$10,671
|
$34,358
|
$86,933
|
$80,000
|
$12,197
|
$39,270
|
$99,362
|
$90,000
|
$13,721
|
$44,177
|
$111,777
|
$100,000
|
$15,245
|
$49,083
|
$124,192
|
Assumes monthly contributions to savings and a hypothetical 8% annual return compounded monthly. Not representative of any particular investment vehicle.
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