Get a Tax Break Now
As soon as you start making contributions to your program, you’ll save on current taxes because your contributions are made on a pre-tax basis. This means you do not pay taxes on the amount you invest until you take it out of the account. If you’re smart, that won’t be until you retire.

And the more you contribute, the more you save in current taxes. That’s why it pays to contribute all you can to your retirement program. Our retirement calculator titled “Impact on Payroll Deduction” can help you calculate these advantages.

Discover the Power of Compounding
When it comes to investing, time can literally be money. The key is a process known as compounding. For investors who follow a very simple guideline, it happens automatically, like clockwork.

Compounding happens when the money you save (either in a savings account, a mutual fund or an employer-sponsored retirement program) earns interest and that interest is kept in the account to earn even more interest.

The longer your money is invested, the greater its potential to compound. Compounded investment earnings is what can potentially make even small investments become large investments given enough time.  Our retirement calculator “Investment Returns Calculator” can help you calculate how much a retirement contribution today could potentially be worth in the future at different rates of return.

Delay and Pay
Regardless of your age, the longer your money is invested, the greater the chance it has to compound. For every 10 years you delay before starting to save for retirement, you will need to save three times as much each month to catch up.

If you put $1,000 a year into a retirement account every year from age 20 through age 30 (for 11 years) and stop—and the account earns seven percent interest annually—your savings will grow and compound to $168,514 by the time you reach age 65. If you didn't start until age 30, however, saving $1,000 annually for 35 years at the same seven percent rate, you would have contributed three times as much money to your account, but only have $147,913 at age 65. * To help you estimate the cost of waiting to save, click here to use the “The Cost of Waiting” calculator provided on this site.

*The compounding concept is for illustrative purposes only and is not intended to represent performance of any specific investment, which may fluctuate. No taxes are considered in the calculations. Assumed eight percent rate of return for a portfolio that includes variable investments. Based on a hypothetical rate of return of eight percent annual interest compounded monthly. Please keep in mind that it is possible to lose money by investing in securities.

A Good Habit
Saving for retirement is a habit that has the potential to really pay off, especially if you start young.  And once you start, you’ll see how easy it is to do. If you set a realistic contribution rate, there’s a good chance you’ll never miss the money.