|Calculated through bankrate.com|
Oh, and maybe I'll finally get some life insurance, since I'm still healthy, and my mom too. That's a scary contribution and commitment because it's every single month, like student loans.
I opened my IRA back in January with Valley Communities Credit Union, but I just couldn't make any contributions. I've read endless articles about starting early and the theory of compound interests. The thing about IRA is that it doesn't require annual contributions (I think; I was once a bank teller). That means saving at your own pace. Gosh, my kids are going to be so lucky!
Read about Roth IRA here:here. Here's a quick demonstration from this site:
John* starts putting $100 a month in his Roth at age 25 until he’s 65. When he retires he’ll have $1,100,000. (assuming compound interest around 8%)Another exciting example:
Bob doesn’t start putting money in his Roth until he’s 35. He then puts the same $100 every month until he reaches 65. When he retires he’ll only have $300,000!!!
Those 10 years of not investing cost him $700,000 OMG!!
The growth of a single $5,000 contribution
For example, if 20-year-old Britney makes a one-time $5,000 contribution to her Roth IRA and earns an average 8 percent annual return, and if she never touches the money, that $5,000 will grow to just under $180,000 by the time she retires at age 65
The growth of annual $5,000 contributionsCompounding can be made even more powerful through regular investments. It is great that a single $5,000 IRA contribution can grow to more than $170,000 in 45 years, but it is even more exciting to see what can happen when Britney makes saving a habit. If she were to contribute $5,000 annually to her Roth IRA for 45 years, and if she left the money to earn an average 8 percent return, her retirement savings would grow to more than $2 million.