A few weeks back I got an angry email from an occasional reader, complaining that too many articles were about people with $1 million or more. Most people in America have nowhere near that amount, he said.
Among those aged 25 to 34 with a 401, the median balance is just under $11,400, according to Vanguard data. Among those aged 35 to 44, it’s around $28,300. It gives you an idea of the mountain most people have to climb. The good news is that he has plenty of time. If you start at 34 with $1,000, add just $5,000 a year, and earn an average compound return of 5% a year after inflation, which is the historic average for stocks, you end up at age 65 with just under $360,000 .
When saving for your retirement, time is magic. Small and steady investments made over a long period of time will produce results. If you can’t start rich, start early. At a mortgage rate of 5.5%, that $15,000 a year would be enough to pay the interest on a $270,000 loan.