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So, I want to discuss something that is dear to me.  Compound interest and retiring.

Did you know that if you can get a 10% return on your investments, your initial investment will double every 7 years?

Or flip it around, if you get 7% interest; your money doubles every 10 years.

If you are 25 years old and saved \$10,000 by that age, by 65 that initial savings at:

• 7% interest rates = \$160,000 (doubled 4 times)
• 10% interest rates = \$400,000+ (doubled over 5 times!)

Of course, few of us have \$10,000 at 25.  So let’s say 35.  If you can get the above rates from 35 to 65; you’d have with that initial \$10,000 investment:

• 7% interest rate = \$80,000
• 10% interest rate = \$160,000+

Note, I’m not discussing interest rates here and the numbers given are rough estimates.  They aren’t actuals at all; the actual compounded amounts are slightly smaller.

Still; not bad eh? But those are just numbers.  What would you need to live on? Well, assuming you could live on \$28,000 a year including OAS & CPP; at 65 you would need about \$128,000.

So, why aren’t you saving yet?