In Short
Waiting to start saving costs more than the deposits you skip, because the earliest dollars compound the longest [1]. Saving $500 a month at 7% from age 30 to 65 grows to about $900,527. Starting 5 years later grows to $609,985: waiting costs $290,542, though only $30,000 of deposits were skipped. To catch up, the late starter would need about $738 a month.
How to Use the Cost of Waiting Calculator
- Enter what you can save each month and the yearly return you expect.
- Enter how many years you might wait (5 by default).
- Set the finish line: your age now and a target age, or a target calendar year.
- Or tap Say It All: “I can save 500 a month at 7 percent, I'm 30, retiring at 65, waiting 5 years.”
The Formula
Both savers put in the same amount at the end of each month, compounded monthly, and stop on the same date. The only difference is when they start [2].
- Balance = monthly saving × ((1 + r)^n − 1) ÷ r, where r = yearly return ÷ 12 and n = months saved
- Cost of waiting = balance starting now − balance starting later
- Monthly saving to catch up = balance starting now ÷ (((1 + r)^n_later − 1) ÷ r)
Worked Examples
| Scenario | Inputs | Result |
|---|---|---|
| Wait five years, from age 30 | $500 a month, 7%, age 30 to 65, wait 5 years | $900,527 vs $609,985 · waiting costs $290,542 · catch up with $738 a month |
| Wait ten years, long horizon | $300 a month, 6%, 40 years, wait 10 | $597,447 vs $301,355 · waiting costs $296,093 |
| Shorter horizon | $1,000 a month, 7%, 20 years, wait 5 | $520,927 vs $316,962 · catch up with $1,644 a month |
| Just one year | $500 a month, 7%, 30 years, wait 1 | Waiting costs $46,902 for $6,000 of skipped deposits |
| Starting young | $200 a month, 8%, 45 years, wait 10 | $1,054,908 vs $458,777 · waiting costs $596,131 |
Illustrative examples, not projections. Figures use the tax year shown and the assumptions above.
Why Does Waiting to Save Cost So Much?
With compound interest you earn interest on your savings and on the interest they have already earned [1]. The first dollars you save have the most years to compound, so they grow the most. Skip those years and you lose the deposits plus all the growth they would have built.
In the $500-a-month example, the late starter skips $30,000 of deposits but ends $290,542 behind. The other $260,542 is lost growth.
How Much More Do I Need to Save if I Start Late?
The calculator works out the monthly amount that would reach the same balance in the shorter time. Starting 5 years late at 7% over a 35-year plan, $500 a month becomes about $738 a month, 48% more. The longer the wait, the steeper the catch-up.
Do Small Amounts Really Make a Difference?
Yes, given time. Investor.gov's example: $365 a year saved instead of spent on a daily $1 candy bar grows to $465.84 in five years at 5%, and to $1,577.50 in 30 years for a single year's savings [2]. Returns in real investments rise and fall, so these figures assume a steady rate.
Frequently Asked Questions
How much does it cost to wait 5 years to invest?
At $500 a month and 7% from age 30 to 65, about $290,542: $609,985 instead of $900,527.
Is it better to start saving early or save more later?
Starting early needs less money each month for the same result. Someone who waits 5 years would need about $738 a month instead of $500 to catch up over a 35-year plan at 7%.
How much will $500 a month be worth in 30 years?
About $609,985 at 7% compounded monthly, from $180,000 of deposits.
Does the calculator include inflation?
No. The balances are in future dollars. Use a return after inflation, such as 4% instead of 7%, to see them in today's dollars.
What return should I assume?
Use a rate that fits how the money is invested, after fees. Real returns vary from year to year, so try a few rates to see the range.
Sources
- Compound Interest Calculator — U.S. Securities and Exchange Commission (Investor.gov)
- Small Savings Add Up to Big Money — U.S. Securities and Exchange Commission (Investor.gov)
Official sources only: the IRS, SSA, BLS and other government agencies. Read how Zentavos researches.