Maureen, age 20, figures she can save $325 each month; or she can keep frittering it away at the mall. She lives with her parents and they think she should save it. Dad says, "Put it into an RRSP and get a tax break as well." Her friends think RRSPs are for old fogies and she doesn't need to start thinking about retirement savings until she's 30.
If Maureen at age 65 could come back and influence the decision of her 20-year old self, she would point out that by starting at age 20, her $325 monthly savings, at 8% compounded annually, could build up to over $1.5 million by age 65. Putting it off until age 30 reduces this figure significantly. Starting at age 20 about doubles the amount she'll have at 65.
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