Waiting Until 40 To Start Investing Can Cost You $583K by Age 60 — Here’s the Breakdown

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By age 60, you could lose $583,000 or more by waiting to invest at 40 instead of 25, even if you save the same monthly amount.

Compound interest is the reason why.

We used the U.S. Securities and Exchange Commission’s compound interest calculator to show the breakdown. Plus, how much you’d need to save monthly — without compound interest — to reach that amount. Find out more below.

The Power of Compound Interest

Imagine that two people aged 25 and 40 invest $500 per month and earn a 7% annual return, roughly in line with the long-term average after-tax return of the S&P 500. Here’s how their portfolios would fare:

25-Year-Old Investor

• Total amount invested by age 60: $210,000 ($500 a month for 35 years)
• Total balance at age 60: $829,421

40-Year-Old Investor

• Total amount invested by age 60: $120,000 ($500 a month for 20 years)
• Total balance at age 60: $245,972

The cost of waiting those 15 years to invest? Roughly $583,000 in lost wealth.

That gap is so large because compounding has a bigger impact over time. Every time your portfolio increases, your gains begin producing returns of their own. This is what compounding means. 

The math makes it clear exactly how advantageous it is to begin contributions as soon as possible. 

This doesn’t mean that all is lost if you are 40 and haven’t started contributing yet. You still have time to build a sizable nest egg for yourself. But you’ll have to contribute more than you would have if you started earlier. 

To reach that same $829,421 in value by age 60 as the 25-year-old investor, for example, you’ll have to sock away about $1,975 per month. That’s more than triple the amount than if you had simply started at age 25.

The bottom line is that even smaller contributions in your 20s and 30s can provide a significant boost to your savings over time. 

Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.

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