It’s never too early to start thinking about retirement. While you may be enrolled in a state-sponsored retirement plan, it may only provide a portion of the income you’ll need down the road. No matter what stage of life you are in, saving for retirement should be a priority – when you start saving may be more important than how much you save.

This hypothetical illustration* shows three 25-year-old employees who save $2,000 a year.

• Karen begins now, saves for 10 years, and then stops.
• Bill delays until he turns 35 and then saves until he is 65.
• Pat starts now and continues through age 65.

While Bill contributes three times as much as Karen, he would retire with only about $7,000 more than her since Karen has the power of compounding working for her. Pat, however, is the real winner; he would retire with as much as Bill and Karen combined.

* Assumes a six percent rate of return and tax-deferred compounding. The rate of return is not indicative of the performance of any investment. No product charges, expenses, or taxes are included; if included, they would reduce the returns.

This Web site is not intended or written to be used as legal or tax advice. As a taxpayer, you cannot use it for the purpose of avoiding penalties that may be imposed under the tax laws. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor.

**Statistics compiled from the 2004 Retirement Confidence Survey, Employee Benefit Research Institute; and "Coming Up Short: The Challenge of 401(k) Plans," Alicia Munnell and Annika Sunden