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The Case for Saving for Retirement First


You probably know you should be saving for retirement, but after the monthly bills, the kid’s college funds, adding some money to your new car fund and putting what’s left into your vacation fund there is simply not much left.


But here is why starting to save for retirement earlier can make those other goals much easier to reach in the end.


For this example, consider a 25 year old and a 40 year old, both of whom determine they will need $1 million saved up by the time they retire at age 65. Assuming a 7% annual return on their investments, how much does each person need to save per month assuming they start with $0 today?


Because of the power of compounding interest – the 25 year old has a significant advantage! Take a look:


Starting at age 25, this investor has 40 years to save before needing the $1 million. If this investor contributes $417.52 per month – which comes to $5009 per year - they will reach that $1 million milestone by the time they reach 65.


The 40 year old has less time for their investments to grow, and must put away $1,317.54 per month – or $15,810 per year - to reach that same $1 million by the time they are 65.


(You can play with these numbers and more with our Compound Interest Calculator)

In total, the 25 year old will have put away about $200,360 ($5,009 * 40) of their own money (interest earned makes up for the remaining $800,000!).


The 40 year old will have put away $395,250 of their own money.


That’s nearly $200,000 more dollars that the 25 year old will get to spend on cars, vacations, a house and the kid’s college savings over their lifetime and still have the exact same amount of dollars at retirement as the investor who waited until age 40 to start (even though that 40 year old was able to save a lot more money each month!).


The 25 year old investor is able to save $902 dollars less per month that the 40 year old investor during most of those months, and still reach the same end total. How far will $900 per month go in funding your new car, or a bigger house, or that dream vacation?


It turns out – being able to save LESS early in life is much more powerful than LOTS later in life. And it’s a big reason why you should start saving for retirement today, even if you may be able to save thousands more later.


This epitomizes why we have no account minimums or a required income threshold here at Hylland Capital. The glory in this industry lands in how big of an account you can land – not in how many people you can help.

Thankfully we are not a place like that.

We understand the power of getting help to those who need it most, and when that help can make the most difference.

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.
–Charlie Munger

You or I don’t need to be geniuses to be able to make your dreams achievable – just a little bit of planning will go a long, long way.


Let’s see how we can get you started, today:

Matt Hylland