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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 $250 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
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Compounded at 12%* Average Annual Return
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Individual A
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Individual B
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22
|
$3000
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0
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3,360
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0
|
|
23
|
$3000
|
0
|
7,123
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0
|
|
24
|
$3000
|
0
|
11,337
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0
|
|
25
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$3000
|
0
|
16,058
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0
|
|
26
|
$3000
|
0
|
21,345
|
0
|
|
27
|
$3000
|
0
|
27,267
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0
|
|
28
|
0
|
$3000
|
30,539
|
3,360
|
|
29
|
0
|
$3000
|
34,203
|
7,123
|
|
30
|
0
|
$3000
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38,308
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11,337
|
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31
|
0
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$3000
|
42,905
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16,058
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32
|
0
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$3000
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48,053
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21,345
|
|
33
|
0
|
$3000
|
53,820
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27,267
|
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34
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0
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$3000
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60,278
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33,899
|
|
35
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0
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$3000
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67,512
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41,326
|
|
36
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0
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$3000
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75,613
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49,646
|
|
37
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0
|
$3000
|
84,687
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58,963
|
|
38
|
0
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$3000
|
94,849
|
69,398
|
|
39
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0
|
$3000
|
106,231
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81,086
|
|
40
|
0
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$3000
|
118,979
|
94,176
|
|
41
|
0
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$3000
|
133,257
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108,837
|
|
42
|
0
|
$3000
|
149,247
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125,258
|
|
43
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0
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$3000
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167,157
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143,649
|
|
44
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0
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$3000
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187,216
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164,247
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|
45
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0
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$3000
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209,682
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187,317
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|
46
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0
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$3000
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234,843
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213,155
|
|
47
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0
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$3000
|
263,025
|
242,093
|
|
48
|
0
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$3000
|
294,588
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274,504
|
|
49
|
0
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$3000
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329,938
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310,805
|
|
50
|
0
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$3000
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369,531
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351,462
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|
51
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0
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$3000
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413,875
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396,997
|
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52
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0
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$3000
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463,540
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447,997
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53
|
0
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$3000
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519,164
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505,116
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54
|
0
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$3000
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581,464
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569,090
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|
55
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0
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$3000
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651,240
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640,741
|
|
56
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0
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$3000
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729,389
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720,990
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|
57
|
0
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$3000
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816,916
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810,869
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|
58
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0
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$3000
|
914,945
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911,533
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|
59
|
0
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$3000
|
1,024,739
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1,024,278
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|
60
|
0
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$3000
|
1,147,708
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1,150,551
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|
61
|
0
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$3000
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1,285,433
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1,291,977
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|
62
|
0
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$3000
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1,439,685
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1,450,374
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|
63
|
0
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$3000
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1,612,447
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1,627,779
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64
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0
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$3000
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1,805,941
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1,826,473
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65
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0
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$3000
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2,022,654
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2,049,009
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Example contains two individuals who contribute to their
Individual Retirement Account (IRA). Individual ‘A’ started at age 22 and
contributed $3000 a year until age 28 and stopped (total outlay-$18,000).
Individual ‘B’ started at age 28 and had to contribute $3000 a year all the
way until age 65 to equal the same amount upon retirement at age 65 (total
outlay-$111,000). 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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