Power of Compounding

Many retirees frequently say their biggest regret is that they did not start saving earlier. Make time work in your favor with the power of compounding. Compounding is the process in which an asset’s earnings are reinvested to generate additional earnings over time.

By committing to a savings plan early, you can leverage the power of compounding. This means the money you invest in the RSA-1 Deferred Compensation Plan will continue to earn tax-free monies over time. Reinvesting these monies results in additional funds being earned year-after-year.

For example: 

• Will started contributing $50 monthly into his account when he was 25 years old.
• At age 55, Will’s account balance will be $50,226.
• Katherine started contributing $75 monthly into her account when she was 35 years old.
• At age 55, Katherine’s account balance will be $34,653.
• Both contributed a total of $18,000, but Will contributed a smaller amount each month and still accumulated $15,573 more than Katherine. This is the power of compounding.

*This example assumes a 6% rate of interest and is for illustrative purposes only. It is in no way indicative of the future performance of any of the investment options available through RSA-1.