Start Early to Save for Retirement

Hygiene Edge

Thank you to James Jolley for great retirement information for hygienists!

It’s never too early to start saving for retirement.  The sooner you can start saving for retirement the longer your hard earned money has the ability to compound.  Even if it’s as little as $50/month you could see the rewards pay off in retirement.

To demonstrate how your money can compound over time here is a hypothetical story of two hygienists named Georgia and Sienna.  These two friends are recent college graduates who are both working for practices that do not offer a retirement plan for their dental professionals.  They both decide that they will need to add to their retirements on their own but choose to at different times in their life.  For this scenario they will both earn a consistent 5% on their investments.  They will be putting their money into a tax-advantaged account such as a Traditional or Roth IRA.

Georgia’s story

Georgia has always believed that you should “pay yourself first” and to save at least 10% of her earnings.  Georgia is 23, employed, and has decided to open an IRA and to start contributing.  Georgia is planning to invest $5,500 a year in this IRA for the next 10 years (for a total of $55,000).  After that time, Georgia will not make any further contributions to her IRA.

Sienna’s Story

Sienna, on the other hand plans to wait until the age of 45 to begin savings for her retirement.  She plans to add $5,500 each year until she reaches the age of 65.  The total investment over the 21 years equates to a $115,500 investment.

Both are now 65 and ready to retire.  So which one is more ready for retirement?  Sienna’s $115,500 IRA is now worth $206,278.  Georgia’s $55,000 IRA has a value of $363,418 a difference of $157,140 and that is investing $60,000 less than Sienna!!!

Time and the power of tax-deferred compounding proved to be a benefit for Georgia.  Traditional and Roth IRA’s are great tools to start putting money away for retirement.  As a refresher, Traditional IRA’s are not taxed until you begin taking distributions.  Roth IRA provide tax-free distribution as long as the account has been opened more than five years and the owner is over 59 ½.  By investing your earnings in a Roth or Traditional IRA it allows you to potentially accumulate retirement savings faster than a general account where taxes would be charged annually on earnings.

No matter your age, I’d suggest to start putting money aside as soon as you can into a tax-advantaged account.  As I have shown in this scenario, the time value of money is an important aspect in reaching your retirement goals. 

James Jolley

James Jolley is a Financial Advisor for Wells Fargo Advisors in Salt Lake City, Utah providing retirement planning for medical professionals.  He can be reached at 800.662.3733 or by email at  

Wells Fargo Advisors is not a tax or legal advisor.

Traditional IRA distributions are taxed as ordinary income. Qualified Roth IRA distributions are not subject to state and local taxation in most states. Qualified Roth IRA distributions are also federally tax-free provided a Roth account has been open for at least five years and the owner has reached age 59 ½ or meet other requirements. Both may be subject to a 10% Federal tax penalty if distributions are taken prior to age 59½.

The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.