Importance of saving early

The miracle of compounding interest will allow you to reach your goal - if you start early and are not interrupted. While intended to show the effect of expense ratios, the figure below also illustrates a very important point: The closer you get to retirement, the more money you will need to reach your goal.

In this example, you are planning to have $1,000,000 for retirement. Look at the tan area. If you had delayed your savings until age 65 and had only accumulated $780,000 (= $1 Million - $220,000), you would need another $220,000 to reach your goal.

Now, look at age 55. The amount you need to reach your goal is much less than age 65. Going further back in time, the shortfall is even less.