“One third of adults in the United States have no retirement savings at all, and according to Bankrate.com, the figure is even worse for people age 18 to 29 (millennials) with 69% having nothing saved. This is very troublesome as it is this age group who is expected to feel the biggest impact from both the lack of employer pensions as well as Social Security shortfalls. Since the 401(k) is voluntary, it is included in with personal savings. It has done very little to ease the impending retirement crisis, with the average amount saved a meager $18,433 (CNBC – March, 2015). The program is underutilized and a lack of financial literacy results in the majority of people making the wrong investment choices.” Will Bitcoin Be the Leg That Stabilizes a Failing Retirement System?

The chart below shows the financial consequences to your retirement when you put off starting to save. Anna, Bob, and Carol each save $2,500 a year for 20 years. They each earn interest of 7% compounded annually on their investment. The only difference is the age at which they start.

Anna:

  • Starts saving at age 25
  • Anna stops saving at age 45 after contributing $50,000

Bob:

  • Bob starts saving at age 35
  • By the time Bob starts at age 35, Anna has a $39,459 head start
  • By the time he reaches age 45, Anna is ahead by $70,204
  • Bob stops saving at age 55 after contributing $50, 000
  • At age 55, Anna is now $106,060 ahead of Bob
  • At age 65, Anna is ahead of Bob by $194,988
  • Bob would have to increase his yearly contribution to $5262 to match Anna’s final savings total

Carol:

  • Carol delays saving for retirement and this procrastination is going to cost her
  • Carol starts saving at age 45
  • As Carol makes her first contribution of $2,500, Anna has already saved $109,663
  • At age 55, Anna is now $176,264 ahead of Carol
  • Carol stops saving at age 65 after contributing $50,000
  • At age 65, Anna is ahead of Carol by $294,110
  • Carol would have to increase her yearly contribution to $9674 to match Anna’s final savings total