left sitting idly by. It's easy—twenty minutes of work a year, and no complicated investment decisions. Essentially, what you're doing is compounding your CD interest into ownership. It's a great compromise!"
I could tell by the expression on Tom's and Cathy's faces that I wasn't the only one who found this idea appealing.
"Four: Regardless of which tax-deferred vehicle you select, IRA or other, start contributing now! I can't stress that enough.
"Two twenty-two-year-old twins decide to start saving for retirement. One opens an IRA, invests two thousand dollars a year for six years, and then stops. His IRA compounds at twelve percent a year . . . very good. The second twin procrastinates and doesn't open an IRA until the seventh year—the year his brother stopped. The second twin then contributes two thousand a year for thirty-seven years. He, too, earns a rate of twelve percent a year. At age sixty-five, they go out for dinner to compare their IRA holdings. The second twin, who is fully aware that his brother stopped contributing thirty-seven years earlier, is confident that his IRA will be worth at least ten times as much. What do you think, Cathy?"
"I think he's wrong... or you wouldn't be telling us the story," was her clever rationale.
"Yeah, yeah," Roy laughed. "At age sixty-five, they would both have approximately one million two hundred thousand dollars."
Despite Cathy's glib response, the significance of Roy's example was not lost on any of us. It was hard-hitting tes-timony to the benefits of starting one's saving early.
"All right. Let's look at some other savings alternatives.