Exploration · Compound interest
The Age Race
Sarah starts investing at 22. Michael waits until 32. Both put in the same amount every month. Both retire at 65.
Sarah· started at 22
$1,638,065
at retirement · contributed $258,000
Michael· started at 32
$772,032
at retirement · contributed $198,000
Balance by age · both retire at 65
Age 65
Monthly contribution$500/mo
Annual return7%/yr
Age 22Age 65
At age 65
Sarah ends with 2.12× what Michael has
after putting in only 30% more of her own money.
Every dollar Sarah invested in her twenties bought ten more years of doubling. Michael can’t buy that back.
Monthly compounding; retirement age fixed at 65. Real returns vary; 7% is a conservative long-run US-equity average.