Tortoise & the Hare

Racing to Retirement Savings

By: Robert DeVries

We all know the old adage, slow and steady wins the race. But is it true when it comes to retirement savings? Are you better off by saving earlier, much like a tortoise, or by saving twice as much later, racing to the finish after “sleeping” for a bit, much like the hare?

Let’s take a look at two hypothetical families, the Tortoise family, who began saving $5,000 per year when they turned 25 and stopped at age 45, and the Hare family, who waited until their children were out of the house before saving $10,000 per year when they turned 45 until they were 65. Both families earned 8% on their investments.

Given these assumptions, the Hare family will have half as much saved for retirement by age 65 despite putting away twice as much money. So even with double the savings amount per year, the delay in waiting 20 years to begin saving resulted in half the retirement balance.

The lesson is clear: higher savings amounts will likely not make up for a delay in savings. Your best strategy for retirement saving is to begin early! Even if the amount is only $5,000 per year, time combined with the magic of compounding returns can create a considerable balance.

The decision of when to begin saving is easy – as soon as possible! Just how much to save, what to invest in and when you can begin withdrawals will be important choices you still have to make. Working with an independent, trusted financial advisor can help you make smart choices about how to execute your retirement savings and withdrawal plans.

Find out what it might be like to have a personal WealthCoach by your side, helping you make smart decisions about your money in the context of your own personal situation, and creating the future you dream of. Call our wealth services firm in Satellite Beach, FL – Melbourne/Brevard area at (321) 773-7773 to schedule your complimentary initial consultation.

You should not assume that any discussion or information contained in this publication serves as the receipt of, or as a substitute for, personalized investment advice from FirstWave Financial. A copy of the FirstWave’s current written disclosure statement discussing our advisory services and fees is available upon request.