This chart provides a simple, powerful
view into the importance of saving as much as is feasible, particularly
if a comfortable retirement is an objective. It also furthers the point
about the power of compounding.
The chart reflects the difference between saving $15,000 per year,
which is the current maximum 401k contribution limit, and saving $7,500
per year. Each assumes a horizon of 20 years, and an 8% growth rate.
After 20 years, $7,500 per year becomes $343,215. Over the same period,
$15,000 per year grows to $686,429. The thirty year period is even more
powerful, as compounding has that much longer to work: $7,500 per year
becomes $849,624 and $15,000 per year becomes almost $1.7 million.