When you’re young and just starting out in your career, retirement planning and saving for retirement suffers from unfortunate naming and bad positioning. No one thinks about retiring when they’ve only just started in their career.

The problem becomes more obvious when you reach your forties or fifties and wish you could travel back in time and give the younger version of you a good kick in the pants. By then, you can see retirement coming and may already be starting to fear what it will look like for you.

Every financial planner will tell you that the younger you start saving for retirement, the better off you’ll be.

While we are no exception to that rule, let’s try to reframe it a bit.

Changing the Retirement Conversation

For decades, our society’s collective view of retirement went something like this:

  • Quit working
  • Buy a condo in Florida
  • Wake up at 11am
  • Play a round of golf
  • Catch the early bird special at the local diner
  • Be in bed by 7pm

(Was that ever an ideal that made someone’s heart pound with excitement?)

Let’s forget about “death by a thousand boredoms” and the long, slow decline to an inevitable grave.

Starting to save now, even if you can’t afford it, can yield almost unimaginable rewards later. That’s true no matter what your age or income.

Understanding the True Power of Compound Interest

Let’s say you put only a very tiny amount in savings. By very tiny amount, I mean that you go for a walk every day until you find a penny lying on the ground. You pick it up and put that into your savings.

You’re not even saving your own money. It’s literally just pennies you picked up off the ground.

Do that every day for twenty years and you’ll save all of $73.00 by dropping them in a piggy bank.

If you stick them in a simple savings account that earns just 0.15% interest, twenty years of picking up pennies would give you a nest egg of $376,584.59. Again, this is from just one penny a day picked up off the ground and put away at a relatively modest interest rate.

Historically, the stock market returns about 10% over long periods of time. Let’s be hyper conservative and say that it will only yield 1% during the next twenty years. Still investing just a penny a day would give you $35,158,360,368,813,000,000,000,000,000,000.00. That’s a number so big, I’ll bet you don’t even know how to say it. (By the way, it’s $35 nonillion.) And this is from just pennies invested at only 1% compound rate of return for twenty years.

That figure is already more money than there is in the whole world. At the market’s historical return of 10%, the number would be exponentially larger.

What If I’m Already in My Thirties or Forties?

You may be wishing you had that time machine right now.

Since it doesn’t exist, let’s look at what you can realistically do over much shorter time frames.

The numbers for simple savings at 0.15% look much less impressive over 10 year ($1,577.82), five year ($96.11), and three year ($27.74) terms.

Still, remember that this is only a penny per day. Boosting that to just a dollar per day makes a huge difference. Then, the numbers become $157,782.33 (10 years), $9,611.11 (5 years), and $2,774.48 (3 years).

Investing a penny a day — still at our hyper conservative 1% return — means:

  • $5,929,448,572,069,140.00 ($5.9 quadrilion) after 10 years
  • $77,002,911.75 ($77 million) in only five years
  • $53,938.17 after investing for just three years

As you might imagine, a dollar a day (that’s just $30 a month!) boosts those numbers back into the mind-boggling range.

  • $592,944,857,206,913,000.00 ($592.9 quadrillion) after 10 years
  • $7,700,291,175.06 ($7.7 billion) in five years
  • $5,393,817.41 ($5.4 million) after just three years

Bringing it Back to Reality

Is it really possible to make $5.4 million in only three years? Theoretically, yes. However the stock market is much too volatile during that short a period of time to count on such a result.

You could actually lose money.

The longer your time frame, not only is your result much larger, but more certain as well. We also assumed you put the money in each day, seven days a week. Putting in lump sums only weekly or monthly would not yield the same results. And we side-stepped the issue of brokerage fees, taxes, and the like.

The point of all this is, anyone can save for retirement and everyone should.

No matter how little you have available to put away or how long before you say goodbye to your career, financial security is still within your grasp!


At Calcite Credit Union, we believe in empowering people to make smart financial decisions. Come talk to an advisor and see what we can do for you today.