1% is small.
It’s one penny of a dollar.
$1 of $100.
And $10 of $1,000
Now, think of that 1% in terms of investing weekly or monthly for retirement. It’s a relatively little amount that could have a remarkable impact on how much you are able to save for retirement.
Consider this. At age 22 you begin investing 1% of your $1,000 weekly paycheck in an IRA or employer-sponsored retirement plan. That’s $10 a week. Now, continue that investing plan over a 45-year period. By age 67 – assuming a 7% rate of return, dividend reinvestment, and interest compounding on a daily basis – your investment could grow to $165,776.
Raise your investment another percentage point, or 10, and see what you could have by age 67.
|Percentage of $1,000 weekly paycheck*||Amount by age 67|
*Calculation is hypothetical and for illustrative purposes only. It assumes a $1,000/week paycheck, no withdrawals and does not take into account fees and sales charges associated with any investment. Amounts are stated in today's dollars and before income taxes.
Start investing for your retirement today
Whether you’re just out of college or well into your career, you can begin investing for retirement today. A financial advisor with Waddell & Reed can help you build a retirement plan that maps out how long you have until retirement, how much you need to invest each month, and how to stay on track to work towards your retirement goals.
If you’re already investing for retirement, kudos! You too can embrace the 1% strategy by increasing your monthly contribution by 1% each year up to the yearly maximum. It’s small, simple and impactful.
All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.
You should carefully consider all of your available options prior to making any financial decisions. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty.
This information is provided for informational and educational purposes only and may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in understanding the issues discussed. Waddell & Reed does not provide tax advice. Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided.