BOSTON (CBS) – No you can’t! The reality is if you start at forty and plan to retire at age 67 you have only 27 years of saving and investing. But if you start at age twenty you will have 47 years.

Waiting to start to save until you are 40 is a big financial mistake. The key years for saving have passed you by. Fewer employers are offering pensions to employees today. So you are responsible for your own retirement savings.

The longer you wait to start saving for retirement the more money you will need to save. An ING Direct survey found that 33% of previous retirees re-entered the workforce because they did not have enough money saved for retirement.

The survey found that 40% would have maxed out their annual contribution if they had a known how much was needed to retire, and another 16% felt a better financial role model would have helped.

If you want $1 million in your retirement nest egg, and I used an 8% return which is realistic, and you start at age 20 you will need to come up with $160 a month for your retirement account. That will amount to about $94,000 saved over 47 years.

If you wait until age 40 to start you will need to invest $880 a month, that’s $284,000 over your working career or 3 times the amount if you had started earlier.

At 40 you could have kids needing braces, college tuition, perhaps a car. Then there is really no money left over for retirement savings.

I have included a chart to illustrate retirement savings at various times in your working career on our website.

You are never too young to start thinking about saving for retirement. I do believe most young workers can have a comfortable retirement if they are disciplined about saving.

One more thing: A kid in highschool with her first job can be introduced to retirement planning by her parents.

A 16-year-old with a summer job earning minimum wage could conceivably earn $3,000 this summer. So what can she do for retirement planning?

Open a Roth IRA. She can contribute up to $5,500 to an IRA. If she is disciplined about this and contributes every year until she reaches age 67 she could very easily have over $1 million in her account.

I would suggest if mom and dad can afford it to help the kids save for retirement by offering to match them dollar for dollar in savings. Gift the kids the money for spending and have them use their earnings for the IRA.


Future value $1,000,000
Retirement age 67
Annual return 8%
    One Monthly Yearly  
Age   Time Investment Investment  
———— ———— ————  ————
20 $26,859 $161 $2,208
25 39,464 243 3,287
30 57,986 368 4,924
35 85,200 564 7,451
40 125,187 876 11,448
45 183,941 1,395 18,032
50 270,269 2,316 29,629
55 397,114 4,158 52,695
60 583,490 8,920 112,072
65 857,339



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