Still, even that $26,000 will only go so far in retirement. So let’s see what happens when you’re investing more than $20 a month.
The Cost of Not Investing Grows With Your Ability to Save
Odds are you spend at least $70 per month on something you don’t really need.
I used to get cable TV, for example, but then decided it wasn’t worth $70 per month to zone out in front of the boob tube. If you were to cancel cable and invest $70 per month, you would end 25 years of investing with $92,878—again, assuming an average annual return of 10 percent per year, compounded monthly.
Of course, inflation means that that $92,878 won’t go nearly as far in 25 years as it does today. So let’s take it even further. If you were to invest $211 per month in an IRA or Roth IRA, you would hit the maximum $5,500 annual limit imposed by the IRS. Invest that $5,500 per year for 25 years at the average return of the S&P 500, you would have $608,131.98.
Now we’re talking! This is still below what many people need to retire, but it puts you well on the way.