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Retirement Planning

Does waiting to save really make a difference?

Start now and put the power of compounding interest to work for your savings plan. This article explains the potential impact.

According to the 2017 Retirement Savings Survey from, more than half of Americans have less than $10,000 in retirement savings. In fact, the report showed that only 26 percent have $100,000 or more saved for retirement and 34 percent have no retirement savings at all.1

What these figures tell us is that American's aren't saving enough for a retirement that could last another 20 or even 30 years longer than that of our parents. The lesson learned here is that procrastination is the enemy and it's never too early to begin saving for retirement. In fact, the sooner you can begin to put your money to work for you the more time your savings has to grow, increasing your financial investment. How? With what Einstein called, “the greatest mathematical discovery of all time,” the power of compound interest.

How compound interest works

Why is compound interest such a great way to build your retirement savings? Because it's earning you interest on interest. For example, suppose you deposit $1,000 in a bank account that pays five percent interest annually. At the end of one year, your balance will have grown by $50 (that's five percent of your starting thousand) to $1,050. Assuming you leave the entire $1,050 in your account, the interest you'll earn during the next year will be greater - five percent of the entire $1,050.

That's the beauty of compound interest and how just by saving more, your money can work even harder for you by maximizing your savings over time. It's why the simple act of saving regularly, combined with the power of compound interest can increase your retirement savings over time. Even if you make no additional contributions and just leave your money alone, compound interest will continue to earn you money.

Start saving today

So, when is the best time to start saving? As soon as possible of course! Create a budget and stick to it. Start with any amount and remember, no amount is too small. The idea here is to simply begin to establish a habit of regularly setting aside money. Even if you're just a few years away from retirement's doorstep, it's still not too late to start saving some additional cash.

It's a fact of life that economic downturns, increased life expectancies, reduced benefits, and rising health care costs mean your retirement dollars need to stretch even further. Simply hoping things will improve can equate to needless stress and worry. The good news is that saving and investing for retirement early can help you be better prepared for whatever the future brings, allowing you to save more and hedge against the influences that can impact your retirement.

At Protective Life, we don't want you putting off saving and investing for retirement another day without putting together a financial investment plan. For more tips on saving for retirement, as well as some handy retirement calculators to help you stay on track, visit the Protective Live Learning Center.




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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

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