Saving for retirement isn't easy, but there's one simple trick to making it more manageable: Give your money as much time as possible to grow. Time is more important than nearly any other factor when it comes to building wealth -- including how much you can afford to save each month.
It will be exponentially easier to grow the money you save the earlier you get started. You could even reach $1 million or more with just a couple hundred dollars per month. Here's how.
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The hidden superpower to increase your savings
Thanks to compound earnings, the longer your money has to grow, the less you'll need to save each month. If you begin saving early enough in life, building a nest egg worth hundreds of thousands of dollars or more is more achievable than you might think.
For example, say you can afford to invest $200 per month from now until retirement. If you're earning a 10% average annual return on your investments (which is in line with the stock market's long-term average), here's how those savings would add up over time:
| Number of Years | Total Savings |
|---|---|
| 20 | $137,000 |
| 25 | $236,000 |
| 30 | $395,000 |
| 35 | $650,000 |
| 40 | $1,062,000 |
Data source: Author's calculations via investor.gov. Chart by author.
Of course, not everyone has three or four decades to grow their savings, and that's OK. No matter how many years you have until retirement, it's better to save as much as you can now rather than putting it off.
You don't need to save hundreds of dollars per month, either. Even small amounts can go a long way, and boosting your savings even a little right now will pay off down the road. Regardless of where you are in your retirement journey, time is your most valuable asset -- so take full advantage of it.
