Key Takeaways
- Putting $10,000 away a year for even just 10 years can make a huge difference.
- If you put the money away in a 401(k)-type account where there are tax deductible and tax deferrable benefits, you will end up with much more money years down the road than you would just saving it on your own.
I met two different consultants on two separate flights not long ago, and both were putting money away in a retirement plan. However, they wanted to put more money away, and they were not aware they could do a lot more. In fact, it would have saved them $10,000 each in taxes that prior year. That’s huge!
Now, maybe you aren’t a consultant, maybe you’re an employee. So, let’s assume you could put the first $10,000 away – just the first $10,000. You can only do it for 10 years, you’re 30 years old, and you’ll put the money away in a 401k or something similar. Now, what would that do versus putting money away on your own? Let’s take a look:
At the end of 10 years, you would have almost $50,000 more in a 401(k)-type account than you would on your own. If you let that money sit until age 65, the difference jumps to about $350,000 between a taxable versus tax deductible/tax deferred account. That is a huge difference! We’re talking about $10,000 invested every year for 10 years, and then just letting it grow. It makes a world of a difference.
The earlier you start to put money away in to a 401(k)-type account, the more it’s tax deductible and tax deferred, the better you can grow your wealth quickly and successfully over time.
Until next time, enjoy!
Gary