Question

if you waited until 45 to begin investigating for retirement, how much less would you have than if you had begun investing at age 25

Answer 1

Suppose an individual is endowed with $1000 at age 25 and will invest in an interest bearing instrument paying 6% interest compounded annually till his retirement at age 60. Therefore his money will grow for (60-25)= 35 years.

The principal will amount to -

1000( 1+ 6%)^35= $7686

However if he starts investing at age 45, he will have only 15 years left for the same money to grow till retirement. Here Principal will Amount to 1000( 1+6%)^15 = $2396 which is nearly 68% less if the same amount was invested at the age of 25.