Time to Save image from the Wells Fargo millennial retirement study
Time to Save image from the Wells Fargo millennial retirement study
Financial Health
August 3, 2016

Eye-opener: The cost of waiting to save for retirement

Most millennials know that preparing for retirement someday is important, but when to start? A Wells Fargo leader shows the difference just nine years can make.

As a father of four and the leader of the retirement business at Wells Fargo, I admit I’m hard-wired to talk to young adults about thinking ahead. So it’s no surprise I was asked recently to spend some time with young analysts at the company to discuss the importance of contributing to our 401(k) plan as early as possible.

What made the discussion especially interesting to me is that my team and I were in the middle of analyzing the findings of our recent Wells Fargo Millennial Retirement Study. What we learned in the study — and what I also heard from the young people I spoke with — is that everyone has reason to feel optimistic about the savings potential this generation has, despite some headwinds.

Most millennials — 85 percent — say that saving for retirement is an important part of the financial transition to adulthood. That’s good.

They’re divided, however, on when to start saving. Fifty-nine percent of respondents have already started saving for retirement; this group said that, on average, people should start saving at age 23. Compare that to those surveyed who have not started saving for retirement (41 percent). This group said that, on average, they expect to start saving at age 32.

What I know from experience is that nine years can fly by if you’re navigating your career path, managing an early salary, repaying student loans, and trying to maintain a social life. So I find it instructive to look at the difference between starting your retirement efforts at age 23 versus at age 32.*

Infographic showing difference in retirement savings for millennials starting at age 23 versus 32

This is just for illustrative purposes, of course, but it can be powerful to see the difference these years can make once you reach age 65.

So my hope for this generation is that they will start saving for retirement as soon as they can — ideally, on their first day of employment or as soon as they’re able to start contributing to a 401(k) plan.

For more, read our special report on retirement readiness, which includes 6 things you can do today to boost your 401(k) and a video on how each generation is saving for retirement.


*Savings calculations in the cost of waiting example were performed by Wells Fargo Institutional Retirement and Trust. Estimate is based on a retirement age of 65, 5% initial deferral rate with a 2% annual increase (up to a 13% deferral rate) and a 7% annual return on investments prior to retirement. Estimates do not include matching contributions. The calculations made are not guaranteed, and are not projections of actual results. The retirement savings amount assumes that the annual contributions and payroll deduction will continue each year until retirement. A regular investment program neither provides assurance of making a profit nor guarantees against loss in a declining market. The calculations do not guarantee results under any savings or investing program, and cannot guarantee that you will meet your retirement savings goal. For more detailed information that takes into account your individual situation, please consult your tax, legal, or financial advisor.

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