/ 401k

Start your 401k young to be rich

This week, we will look at the average 401k assets based on which year you start contributing. Let's look specifically at the total amount left in your 401k at age 65 based on the year you started contributing.
Compounded interest is a power force. Einstein famously said once :

compound interest is the most powerful force in the universe

  • Albert Einstein

Previously, we picked the starting age at 22years old, which is a typical age after completing an undergraduate degree and joining the workforce. Now what happens if you gradually decide to delay your contributions by a few years?

Age started 401k at 65
22 $2,267,145.08
23 $2,144,900.08
24 $2,028,476.27
25 $1,917,596.44
26 $1,811,996.61
27 $1,711,425.35
28 $1,615,643.19
29 $1,524,422.08

Whoa!! You can see a whooping 742k$ difference between if you started at age 22 and age 29. And the contribution amount was only 120k$.
Again this is with very conservative compound interest of 5%. This does not take into account inflation, but even if you do, it would end up in the same balk part (assume 7% return with 2% inflation).

Now you can see why contributing early to your 401k is important. Of course, not everyone is 22years old, but my point is, you should have started contributing yesterday (and keep on maxing it).

Have a great week!