The Most Important Retirement Table You’ll Ever See

Preparing for retirement is becoming more challenging for many Americans. Social Security is only designed to make up around 40% of your pre-retirement income, and most workers no longer have access to pensions. That means the bulk of your income in retirement will likely need to come from your personal savings. Saving hundreds of thousands of dollars is a daunting task, but there’s a trick to make it a little easier: Get started now.

Saving is easier when time is on your side

Time is your most valuable resource when it comes to saving for retirement, and the sooner you begin investing, the less you’ll need to save each month to build a healthy nest egg. Even if you can’t afford to save much right now, it’s better to invest just a little each month than to put it off. The longer you wait, the harder it will be to catch up later. Say, for example, you’re able to invest $200 per month and you’re earning a modest 8% average annual return on your investments. Here’s approximately how much you’ll accumulate over time, depending on how many years you have to save:

Number of Years	Total Savings
20	$110,000
25	$175,000
30	$272,000
35	$414,000
40	$622,000

Source: Author’s calculations via Investor.gov. Five years may not seem like a long time in the grand scheme of things, but it can make a difference of tens of thousands of dollars when it comes to your overall savings. If you’re on the fence about whether to start investing now or wait a few years, it’s wise to start now.

Should you still invest during a market downturn?

Market slumps are always nerve-wracking, but they’re especially intimidating when you’re saving for retirement. Investing during a downturn can feel like you’re throwing your money away, so is it really worth it to continue investing right now? The short answer is yes — but it also depends on your time frame. Even the worst market crashes and recessions only last a few years at the longest. The longest bear market in history (the dot-com bubble burst) lasted 929 days, or around 2.5 years. If you still have decades left before retirement, the market will recover long before you need your savings. If you’re planning on retiring within the next year or so, you might need to be a bit more careful with how you invest. Be mindful of your asset allocation, and double-check that your investments are aligned with your risk tolerance.

Keeping your money safe

It’s not easy to invest during a market slump, but if you put off saving, it will be harder to build a robust retirement fund. Despite the current market volatility, then, it’s wise to continue investing. Your portfolio could lose value in the short term if stock prices continue to fall, but the market has a long history of recovering from even the worst crashes. Given enough time, your investments should rebound once the market bounces back. By keeping your money in the market and continuing to invest consistently, you’ll be in a fantastic position to build long-term wealth.