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Ben Stein’s Assumptions

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Ben Stein is one of Yahoo! Finance’s new featured columnists. I’ve always liked his opinions on investing (but I’ve stayed away from his opinions in politics).

In his latest column, Ben Stein takes some conservative assumptions for stock market performance and illustrates how the sooner you start saving for retirement, the better — much better.

With his assumptions, to reach the nest egg goal set forth, starting as at age 25 requires only 3 percent of gross income invested each year. By starting later, at age 45, 18 percent of gross income needs to be invested to reach the same goal. It gets worse! Starting at age 50 requires 28 percent and starting at age 55 requires 50 percent.

Bottom line: Get started right away, even if it’s just a small amount in an index fund that matches the total stock market. I started saving for retirement at age 28 and I currently put 14 percent into my 401(k) and Roth IRA combined.

At age 25 I was working for a non-profit organization and was barely making enough to cover (relatively low) living expenses and (relatively high) commuting expenses. Some weeks we weren’t given paychecks on time because there wasn’t any money in the company’s payroll account. They began offering a 401(k) type of investment while I was working there, but when I was worried about being able to write a rent check each month, I couldn’t think about much else financially.

Updated February 6, 2012 and originally published October 3, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .