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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
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AGE
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Individual A
CONTRIBUTION
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Individual B
CONTRIBUTION
|
Compounded at 12%* Average Annual Return
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Individual A
|
Individual B
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22
|
$2000
|
0
|
2,240
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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
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25,538
|
7,558
|
|
31
|
0
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$2000
|
28,603
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10,705
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|
32
|
0
|
$2000
|
32,035
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14,230
|
|
33
|
0
|
$2000
|
35,880
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18,178
|
|
34
|
0
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$2000
|
40,185
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22,599
|
|
35
|
0
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$2000
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45,008
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27,551
|
|
36
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0
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$2000
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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
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95,767
|
|
44
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0
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$2000
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124,810
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109,499
|
|
45
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0
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$2000
|
139,788
|
124,879
|
|
46
|
0
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$2000
|
156,562
|
142,104
|
|
47
|
0
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$2000
|
175,350
|
161,397
|
|
48
|
0
|
$2000
|
196,392
|
183,004
|
|
49
|
0
|
$2000
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219,959
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207,205
|
|
50
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0
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$2000
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246,354
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234,310
|
|
51
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0
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$2000
|
275,917
|
264,667
|
|
52
|
0
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$2000
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309,027
|
298,667
|
|
53
|
0
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$2000
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346,110
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336,747
|
|
54
|
0
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$2000
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387,643
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379,397
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|
55
|
0
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$2000
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434,160
|
427,165
|
|
56
|
0
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$2000
|
486,260
|
480,664
|
|
57
|
0
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$2000
|
544,611
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540,584
|
|
58
|
0
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$2000
|
609,964
|
607,694
|
|
59
|
0
|
$2000
|
683,160
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682,858
|
|
60
|
0
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$2000
|
765,139
|
767,041
|
|
61
|
0
|
$2000
|
856,956
|
861,325
|
|
62
|
0
|
$2000
|
959,791
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966,925
|
|
63
|
0
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$2000
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1,074,965
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1,085,196
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64
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0
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$2000
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1,182,462
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1,217,659
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65
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0
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$2000
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1,324,357
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1,366,018
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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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