This is a story of California teachers Jack and Jill. In Jack's younger years he decided to spend more money and put off saving until his thirties. When he turned 37 he decided to save. He thought of his family and future, and saved every year until he retired at 70. In Jill's younger years, she began to save immediately, but after 15 years she stopped and never saved again. Jill saved 15 years and Jack saved 33... who do you think had more at retirement?
*This chart is to demonstrate the effects of compound interest. This is not a prediction of any individuals investment performance.
** This graph assumes a fixed 7% interest rate and a yearly investment of $3,000
Even though Jill saved half as long as Jack, her investment was compounding 20 years longer than Jacks. Her interest was paid on a larger and larger sum every year, growing exponentially in the last years of her career. This is how Jill earned $232,000 in interest during her last 6 years of work while Jack earned $133,000.
Plug in estimated values to see how much waiting can cost