Money Talks, So Should You

Q&A: What's the most important step to a financially secure retirement?

Nola Kulig
by Nola Kulig, The Garrett Network

If you have done any reading on personal finance, you will have heard this before, but it really is true:

Start saving early. It works because of the magic of compound interest and time.

An example will help illustrate. All of these savers start at age 25. Ms. Early Start gets going right away saving $200 a month. Ms. Slightly Later Start and Ms. Catch Up begin their savings five years later. They all achieve the same rate of return of 6 percent on their savings.

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Savings per Month

Years of Investing

Rate of Return

Account Value at Age 65

Ms. Early Start



6.00 percent


Ms. Slightly Later Start



6.00 percent


Ms. Catch Up



6.00 percent


Source: adapted from

Ms. Early start has a nice nest egg of $400,289 by the time she retires at age 65. But Ms. Slightly Later Start, even though she also got 6 percent return on her money, only ends up with $286,367. That’s $113,992 or 28 percent less, than Ms. Early Start, for simply starting five years later.

Ms. Catch Up realizes she is starting a bit later and knows she needs to save more per month. In order to have the same nest egg as Ms. Early Start, she has to save $280 per month. That’s 40 percent more than if she had started five years earlier. It’s clear from these numbers that the earlier you start a savings program, the easier it is to meet goals.

The other message from this example is that modest sums add up. Sometimes we think we have to put away such large amounts of money that we’ll never be able to achieve a comfortable retirement. But with an early start, it is very doable. Save whatever you can as soon as you can, and you will be well on your way to financial security. While not impossible if you delay, it will prove much, much harder.


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Nola Kulig, CFA operates Kulig Financial Advisors, a financial planning and investment advisory practice and an office of Garrett Investment Advisors, LLC, a Fee-Only SEC registered firm, in Longmeadow, MA. She has a BA in economics from Whitman College, where she graduated cum laude and Phi Beta Kappa. She is a Chartered Financial Analyst, and a member of the CFA Institute and Hartford, CT CFA Society. She is working toward the Certified Financial PlannerTM designation.