The Later You Start The Harder It Gets To Build Wealth

It is true, the sooner you start the better, although it is not altogether impossible if you have still some time before you retire. The older you are the harder it gets to build wealth. The time needed for compound growth to really kick in is too short.

If you wait until you’re 32 and invest $5,000 every year earning 10% in a Roth IRA account, you could end up with about one million. A respectable amount it is not the two million if you had started ten years earlier. At 42, you would only accumulate about one third that amount or about $400 thousand. By the time you are 50 you will end up with maybe $200 thousand by age 65.

Social Security is not going provide a comfortable retirement, it is in jeopardy of collapsing altogether – after all it is the largest ponsi scheme ever at its worst (new investors paying into a system that pays out to older investors). It will collapse, eventually, unless there is some serious reform. If you’er are lucky enough to get Social Security the money you will receive will be far from generous, or even enough and it will be taxed which means you get even less.

If instead you were to invest in a Roth IRA, you can withdraw the money tax free after age 59 1/2, as long the deposit was made at least five years earlier. Imagine having a million dollars in tax free dollars when you retire. It will make up for the small sacrifices you made today to be rich tomorrow.

Now I don't want to mislead anyone. What I presented here is possible but things do happen. Interest rates do fluctuate, the stock market does go down, and you will more than likely find yourself unemployed more than once before you are ready to retire – a fact of life anymore. That's why a budget, emergency fund and being frugal is so very important. Despite this people who have followed this path of investing ended up building their own wealth. Will you?

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