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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 $333 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
|
$4000
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0
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4,480
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0
|
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23
|
$4000
|
0
|
9,497
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0
|
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24
|
$4000
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0
|
15,117
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0
|
|
25
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$4000
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0
|
21,411
|
0
|
|
26
|
$4000
|
0
|
28,460
|
0
|
|
27
|
$4000
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0
|
36,356
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0
|
|
28
|
0
|
$4000
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40,718
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4,480
|
|
29
|
0
|
$4000
|
45,604
|
9,497
|
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30
|
0
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$4000
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51,076
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15,117
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31
|
0
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$4000
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57,205
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21,411
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32
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0
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$4000
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64,070
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28,460
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33
|
0
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$4000
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71,759
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36,356
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34
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0
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$4000
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80,370
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45,198
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35
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0
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$4000
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90,014
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55,102
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36
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0
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$4000
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100,816
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66,194
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37
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0
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$4000
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112,914
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78,618
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|
38
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0
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$4000
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126,463
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92,532
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39
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0
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$4000
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141,639
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108,116
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40
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0
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$4000
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158,636
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125,570
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41
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0
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$4000
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177,672
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145,118
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|
42
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0
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$4000
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198,993
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167,012
|
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43
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0
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$4000
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222,872
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191,534
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44
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0
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$4000
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249,617
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218,998
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45
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0
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$4000
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279,571
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249,758
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46
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0
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$4000
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313,119
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284,209
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|
47
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0
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$4000
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350,694
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322,794
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48
|
0
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$4000
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392,777
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366,009
|
|
49
|
0
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$4000
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439,910
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414,411
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50
|
0
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$4000
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492,700
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468,620
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51
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0
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$4000
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551,824
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529,334
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52
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0
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$4000
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618,043
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597,335
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53
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0
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$4000
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692,208
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673,495
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54
|
0
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$4000
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775,273
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758,794
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55
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0
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$4000
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868,306
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854,330
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56
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0
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$4000
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972,502
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961,329
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57
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0
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$4000
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1,089,203
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1,081,169
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58
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0
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$4000
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1,219,907
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1,215,389
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59
|
0
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$4000
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1,366,296
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1,365,716
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|
60
|
0
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$4000
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1,530,251
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1,534,082
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|
61
|
0
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$4000
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1,713,881
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1,722,652
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|
62
|
0
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$4000
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1,919,547
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1,933,850
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63
|
0
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$4000
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2,149,893
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2,170,392
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64
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0
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$4000
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2,407,880
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2,435,319
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65
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0
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$4000
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2,696,826
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2,732,037
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Example contains two individuals who contribute to
their Individual Retirement Account (IRA). Individual ‘A’ started at age 22
and contributed $4000 a year until age 28 and stopped (total outlay-$24,000).
Individual ‘B’ started at age 28 and had to contribute $4000 a year all the
way until age 65 to equal the same amount upon retirement at age 65 (total
outlay-$148,000). 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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