Why it can pay to start saving early Alison - starts saving at age 25 - Contributes $4,000 a year for 40 years into an IRA David - starts saving at age 35 - Contributes $4,000 a year for 30 years into an IRA Thanks to the power of long-term, tax-deferred compounding, Alison's balance is more than $650,000 higher than David's. (Results based on both earning on 8% rate of return and retiring at age 65.) Starting Age: 25 35 Contribution Time: 40 Years 30 Years Total Contribution: $160,000 $120,000 Balance at age 65: $1,208,654 $528,534 Chart assumes $4,000 annual IRA contributions made on January 1 each year of investing. It also assumes an annual rate of return of 8% on a non-FDIC insured brokerage investment and tax-deferred compounding in an IRA. Past performance is no guarantee of future results. An account may earn more, may earn less, or may incur a loss. Final account balances are prior to any distributions, fees, and taxes which would lower the ending balance. Taxes may be due upon distribution. You may be subject to a 10% penalty if you withdraw prior to age 59½. Investing in this manner does not ensure a profit or guarantee against loss. Investing in securities involves risks due to price fluctuations.