Denver’s 7NEWS wants to encourage you to save with what might seem to be an ambitious goal in mind: to retire as a millionaire. But if you start young enough, it’s not difficult at all:

It might help if you knew when you could be a millionaire. 7NEWS found a “Millionaire Calculator” that can predict that golden age.

We took the millionaire calculator to Rooster & Moon Coffee Pub in Denver to run the calculation, using current investments, monthly contributions, and a conservative 6 percent expected rate of return. The result revealed when $1 million would be saved.

Some patrons told 7NEWS reporter Amanda Kost that they were surprised by the results.

“This is how much you can put away, and this is where it can get you,” Laura Mulvey mused.

When Mulvey calculated her millionaire age of 88, she made some adjustments and found what saving more money could buy for her future. Her projected millionaire age went from 88 to 58.

“I love it. I love it. It definitely surprises me,” Mulvey said.

Check out the “millionaire calculator” links they’ve posted. But the real secret, and the reason this message is directed especially to the young, is the “miracle of compounding.” Richard Russell, author of Rich Man, Poor Man, explained it with this example decades ago:

In order to emphasize the power of compounding, I am including this extraordinary study, courtesy of Market Logic, of Ft. Lauderdale, FL 33306. In this study we assume that investor (B) opens an IRA at age 19. For seven consecutive periods he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this fellow makes NO MORE contributions — he’s finished.

A second investor (A) makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he’s 65 (at the same theoretical 10% rate).

Now study the incredible results. B, who made his contributions earlier and who made only seven contributions, ends up with MORE money than A, who made 40 contributions but at a LATER TIME. The difference in the two is that B had seven more early years of compounding than A. Those seven early years were worth more than all of A’s 33 additional contributions.

Specifically, investor B, who invests $2,000 a year for seven years and then stops after age 26 has about $945,000 at age 65. Investor A, who starts saving seven years later and continues to invest $2,000 a year until age 65 has about $974,000. But investor A has put in $80,000 versus investor B’s $14,000, and his investment has grown 11-fold while investor B’s investment has grown 66-fold.

Take it from someone who didn’t know this or heed it, who only started seriously saving after age 40, and who’s been saving 30-40% of his income to try to make up for lost time: start saving early. Max out your 401k and/or IRA starting with your first job. Keep it up for at least a decade, preferably two or more. You’ll be a millionaire or maybe a multimillionaire by the time you retire. If you don’t spend it all before you die, your kids will thank you. 😉

To put this in simple terms, how early in your life you start saving/investing is much more important than what you save/invest in. Time is what will make you rich.