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EPIC RETIREMENT SERVICES CONSULTING 303 Fifth Avenue Suite #703 New York, NY 10016 Tel: (212) 532-5332 Directions | Contact Us |
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The first decision you need to make when joining the Plan is: "How much should I contribute?" Keep in mind that regular contributions to the Plan are pre-tax. This means that your 401K contributions will reduce your taxable income.
If you are already in the Plan, you may then ask: "Am I contributing enough?" As a rule of thumb, most individuals need to supplement approximately 70% of their income at retirement for life. The later in life you start to save, the more you need to save to "catch-up". The simplest rule to seek to ensure your “golden years of retirement” are truly “golden”: start saving now! Consider two investors – one 20 years old/the other 40 years old. Both are saving for retirement at age 65 at an 8% rate. Both save the same amount of money over their savings lifetime—that is, either $54,000 or $67,500. From the tables that follow you’ll see the benefit of tax-deferred compounding – which Albert Einstein is known to describe as “the most powerful force in the universe.”
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| Monthly Contribution | Total Contributions Age 65 |
Portfolio Value Age 65 |
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| 20-Year Old Investor No Match |
$100 | $54,000 | $527,454 | |||
| 40-Year Old Investor
No Match |
$180 | $54,000 | $171,185 | |||
| 20-Year Old Investor No Match |
$125 | $67,500 | $659,317 | |||
| 40-Year Old Investor
No Match |
$225 | $67,500 | $213,981 | |||
| AND THEN | ||||||
| Have you ever said, “I’ll wait until next year.” You should know that waiting could be one of the biggest mistakes you can make. | ||||||
| $150 | $250 | $350 | ||||
| Cost of Waiting from Age 25 to Age 26 |
$41,856 | $69,760 | $87,665 | |||
| Cost of Waiting from Age 35 to Age 36 |
$18,857 | $31,429 | $44,000 | |||
| Cost of Waiting from Age 45 to Age 46 |
$8,496 | $14,159 | $19,823 | |||
Remember: |
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