The Largest Retirement Table You've Ever Seen |  Smart Switch: Personal Finance

The Largest Retirement Table You’ve Ever Seen | Smart Switch: Personal Finance

(Selena Marajin)

When I reflect on my own personal investment history, there is clearly a “most important retirement chart” that I remember seeing. I was 20 years into a new job, and as part of a retirement benefits presentation, we were presented with a chart showing how money grows.

At the time, I hadn’t had much financial education in my life and hadn’t gone to business school yet, so the information was new to me, and it was a huge wake-up call. I quickly realized that I would be much better off investing in stocks for the long term than simply accumulating excess income in a bank account.

Image source: Getty Images.

The most important retirement table you will ever see

I no longer have that specific chart to reference, but the chart below does as good a job or better of demonstrating the power of simple but regular investing.

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Growing at 8% for:

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years




10 years




15 years




20 years




25 years




30 years




35 years




40 years




What the most important withdrawal table tells us

There are multiple takeaways from the table above. For example:

  • Accumulating great wealth generally requires a combination of time, significant regular investments, and a respectable growth rate.
  • The more time you have, the more you can accumulate, and you’ll see the biggest jumps in your net worth over the years. Compound money starts small and can become huge over time.
  • You can become a millionaire by simply investing $5,000 a year, although larger sums can get you there faster and can also help you accumulate much more. See what happens if you can save $10,000 or $15,000 each year.
  • It’s important to start this process as soon as you can, because every year you’re behind (even if you’re only 20 now) represents a later year that your money won’t be able to grow for you. In other words, look at the different results when you invest for, say, 20 years instead of 25 years.

Note, too, that while I’m using an 8% average annual growth rate in the table, your own average growth rate may well be higher or lower. For many decades, the stock market has averaged a growth rate of about 10% per year, as measured by the S&P 500.

How to invest in the stock market

How should you invest in the stock market in the long term? Well, you can certainly take the time to read and learn a lot about investing and then invest in some growth stocks or other carefully selected stocks (dividend-paying stocks are always worth considering).

But most investors would be better served by no-frills, broad-market index funds that easily and quickly deploy their hard-earned money across many companies, providing a return close to the general market’s return. The best index funds charge extremely low annual fees, which will take very little away from your earnings.

Regardless of how you trade, make sure you learn enough to be comfortable with what you’re doing so you don’t panic every time the market moves south, as it will from time to time. Remember that every recession has been followed by a recovery.

And keep in mind that chart that shows how the money grows: you can keep it on track and keep your eyes on the prize. You may be able to retire as a millionaire or even a billionaire if you are diligent and smart about saving and investing.

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