Posted on May 03, 2006 at 18:23:52:
More important than the retirement vehicles or investment options that you choose, there are two keys to a satisfactory retirement nest egg: first and most important, time to make the most of interest compounding; and second, the level of savings.
Start saving at 25, and even a small amount will grow tremendously, even if you don’t fund the account every year. The money keeps working, and growing, on its own over the years. Start at 35, and it’s hard to catch up. Remember that interest is paid not only on the principal but on the interest, too.
How much to sock away? At the very least, contribute enough to the company retirement plan to get the full employer match. Every percentage above that will pay off. Some financial planners suggest the young workers try to save 15 percent, including the employer’s contribution. Considering that it’s pretax money that’s deducted before you see it, it’s not so hard.