Q: Can’t I delay a few years saving for retirement and catch up on my 401(k) contributions?

A: Sure, but do you know how big the catchup is going to be?

Knowing the cost of delay might have you take a second look at your budget and figure out how to start saving now!

The most important dollars you can invest for retirement are the dollars you invest this week. The longer money is invested and its earnings can compound, the greater the amount you will have saved at retirement—and the less you have to invest to reach your retirement goal while you are working.

The table below assumes you want to retire in 35 years, you invest $1,000 per year and earn 7% annually. Compare the future value of your investment account for each one-year delay in getting started.

A delay of 1 or 2 years can result in much less accumulation, let alone 5 years!

“Yeah, but I can play catch up,” you say.

This next table calculates how much of a “catchup” you need to invest each year to accumulate the same amount of money you might have over 35 years.

A delay of 1 or 2 years, let alone 5, means you have to invest more money!

The differences in the amounts saved or annual catchup get really big if you multiply $1,000 by 3, 5, 10 or 20 to reflect the amount of money you really need to be saving annually for retirement. And we ignored the lost tax savings and employer matching dollars resulting from your delay.

Do you really think it gets easier to find the dollars in your household budget to save for the future? Pay yourself first!