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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 $166 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

$2000

0

2,240

0

23

$2000

0

4,748

0

24

$2000

0

7,558

0

25

$2000

0

10,705

0

26

$2000

0

14,230

0

27

$2000

0

18,178

0

28

0

$2000

20,359

2,240

29

0

$2000

22,802

4,748

30

0

$2000

25,538

7,558

31

0

$2000

28,603

10,705

32

0

$2000

32,035

14,230

33

0

$2000

35,880

18,178

34

0

$2000

40,185

22,599

35

0

$2000

45,008

27,551

36

0

$2000

50,409

33,097

37

0

$2000

56,458

39,309

38

0

$2000

63,233

46,266

39

0

$2000

70,821

54,058

40

0

$2000

79,319

62,785

41

0

$2000

88,837

72,559

42

0

$2000

99,498

83,506

43

0

$2000

111,438

95,767

44

0

$2000

124,810

109,499

45

0

$2000

139,788

124,879

46

0

$2000

156,562

142,104

47

0

$2000

175,350

161,397

48

0

$2000

196,392

183,004

49

0

$2000

219,959

207,205

50

0

$2000

246,354

234,310

51

0

$2000

275,917

264,667

52

0

$2000

309,027

298,667

53

0

$2000

346,110

336,747

54

0

$2000

387,643

379,397

55

0

$2000

434,160

427,165

56

0

$2000

486,260

480,664

57

0

$2000

544,611

540,584

58

0

$2000

609,964

607,694

59

0

$2000

683,160

682,858

60

0

$2000

765,139

767,041

61

0

$2000

856,956

861,325

62

0

$2000

959,791

966,925

63

0

$2000

1,074,965

1,085,196

64

0

$2000

1,182,462

1,217,659

65

0

$2000

1,324,357

1,366,018

 

 

Example contains two individuals who contribute to their Individual Retirement Account (IRA). Individual A started at age 22 and contributed $2000 a year until age 28 and stopped (total outlay-$12,000). Individual B started at age 28 and had to contribute $2000 a year all the way until age 65 to equal the same amount upon retirement at age 65 (total outlay-$74,000). 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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