When’s the best age to start investing in an IRA

by Darwin on June 24, 2013

Many people wait much longer than they should to begin thinking about retirement. After all, when you take that first job it’s often the last thing on your mind. You have student loans to pay back, an apartment to rent, furnishings to buy, and you can save for retirement later, right?

Healthcare costs are rising, and so is the cost of retirement. People are living longer, and many retirees are finding that they simply did not save enough and are a financial burden on their adult children, who are struggling to save for their own future. Worse yet, some baby boomers are unable to afford retirement and are spending their golden years working 9 to 5 instead of doing what they enjoy.

The truth is, the best time to start investing in an IRA is right now. It is a sobering truth that procrastination is your worst enemy when it comes to starting your retirement account. After all, you wouldn’t skimp on car maintenance or homeowner’s insurance. Doing so could cost you big in the future, and so can putting off IRA contributions.

Let’s look at an example of how being proactive about contributing to your IRA can pay off in the future. Tom and Dan both worked as managers at the same office for 30 years after graduating from college. Tom started his IRA at age 22 and contributed for 8 years, then stopped contributing and left the account alone. Dan didn’t even think about his retirement account until he was 28, and finally got around to starting one at age 30. He contributed the same amount Tom did monthly, but continued all the way until he retired 22 years later. So Tom made 96 payments and Dan made 264. Who had more money in their IRA when they retired? It might seem obvious that Dan had more since he contributed more money. The truth is that it is much more likely that Tom had just as much or even more due to compound interest. Tom’s money had a lot more time to work for him, while Dan was busy working for his money.

If you’re already over the age of 22, 30, or even 40 is it too late, then? Absolutely not! It’s never too late to begin planning for the future, although the hard truth is the older you are the less time you have. Your investment strategies will be different as well as the closer you are to retirement, the more conservative your portfolio should be. This often means lower returns, but more security.

Make a commitment today to save for your future. Come up with a plan and decide what steps you need to take. This will require some research and perhaps some professional assistance from a financial planner. A good place to start is at your workplace as many companies have employer sponsored plans and some even match your contributions. Starting an IRA now is the best way to assure your future retirement is not only possible, but comfortable.

This article was written by Evan Lewis, who is the primary writer for shophomeinsurance.net, which specializes in home insurance rates and quotes.


{ 3 comments… read them below or add one }

krantcents June 25, 2013 at 11:54 am

Time is the most important factor in investing! It can offset mistakes or volatile markets. It doesn’t matter how much you start with because you can always add to it.


Modestmoney June 25, 2013 at 7:49 pm

The earlier the better with as little or as much as one can manage to stash away! As you’ve pointed out, with the power of compounding one won’t have to struggle more in later employment years to make a decent retirement fund.


JoeTaxpayer June 28, 2013 at 9:28 pm

Best age? 11! That’s when my daughter started babysitting, and when we made her first Roth IRA deposit. I just made her 4th annual deposit of $2000. She reads how pathetic the saving rate is in this country and vows to be an extreme saver.


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