Why Starting Early in Investing Matters: A Clear Look at the Numbers
Discover how much of your income you need to save based on your age. The numbers reveal why starting early is crucial—and why delaying can be costly.
This chart clearly highlights the power of early investing—and why delaying can be costly.
It shows how much of your current income you'll need to save annually to replace that income in retirement, based on your age and savings rate. The assumption is a 6% net rate of return (12% growth minus 6% inflation), which reflects a realistic long-term scenario in India or globally.
Real-World Examples
Let's take two examples:
- A 20-year-old who saves just 15% of their income annually can replace 158% of their income by retirement.
- But a 40-year-old, even if they save 30%, will only reach 69% replacement.
Why Time Matters
This is because compounding works best with time. The earlier you invest, the more your money multiplies, even if you start with small amounts. Waiting means you'll have to save more than double later to achieve the same goal.
By age 50, even a 40% savings rate may not get you to 100% income replacement.
Key Takeaway
Time is your biggest asset. If you're young, start now—even if the amount is small. If you're older, you'll need to save aggressively or invest smarter to catch up.