Here's the Best and Second-Best Time to Start Investing for Retirement

Read this now and consider taking action — because you can greatly improve your future financial security.

There are many best times to do many things. For example, the best time to see cherry blossoms in Washington, D.C., is usually late March or early April. The best time to apply sunscreen is around 15 to 30 minutes before you venture into sunshine (and remember to reapply it at least every two hours).

There’s a best time to start investing, too. It’s critical for all of us who aren’t financially independent to start saving and investing for retirement — and to have a solid retirement plan as well — even if we’re still relatively young. So read on to learn when you might want to start doing so.

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Image source: Getty Images.

The best time to start investing for retirement

So when is the best time to start investing for retirement? Well, according to a clever quip, it’s 25 years ago — or some other point in the distant past. It’s hard to argue with that answer, too, because look what you’d have today if you’d started investing 25 years ago and did so regularly:

If You’d Invested This Amount Annually for 25 Years…

…You’d Have This Much If It Grew at 8% Annually, on Average









Data source: author.

See? You’d be in pretty good shape for retirement, and if you were still plenty of years from retiring, you could improve your future financial security even more.

But few of us have time machines, so this answer isn’t very helpful. Let’s check out the second best time to start investing for retirement, then.

The second best time to start investing for retirement

The second best time is… now. That’s right. No matter whether the stock market has just crashed or is at an all-time high, consider buying your first shares of stock now.

If the market has recently crashed, that’s actually an excellent time to start investing, because the shares of many great companies — and broad-market index funds — will be depressed, making them more attractive.

If the market is at an all-time high, many people might think about steering clear of it, figuring that it might drop soon. But that’s wrong-headed thinking, because even after one or two years of solid gains, the stock market can still deliver another year or years with more solid gains. You just don’t know what it will do in the short term, and trying to guess is referred to as “market timing,” an ill-advised practice.

So consider just investing now. You’ll likely be investing over a long period, perhaps adding money every quarter or so. If so, then it will matter even less where the market is today, because you’ll be investing in installments over time, when the market is up, down, or stalled.

How much money you can make, starting now

So start investing now. You’ll likely be surprised at what you can accomplish, even if you’re only 10 or 15 years from retiring. The table below shows what’s possible:

Growing at 8% For:

$7,000 Invested Annually

$15,000 Invested Annually

5 years



10 years



15 years



20 years



25 years



30 years



35 years



40 years



Data source: author.

Whether you start today or tomorrow, don’t put off saving and investing for retirement. And remember that you don’t need to become a stock-analysis genius, either. A simple, low-fee index fund can be all you need. Here are a few to consider:

  • Vanguard S&P 500 ETF (VOO 0.15%)
  • Vanguard Total Stock Market ETF (VTI 0.14%)
  • Vanguard Total World Stock ETF (VT 0.28%)

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard Index Funds-Vanguard Total Stock Market ETF and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

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