Want a nearly painless way to save more money?
Try saving just an extra percentage point a year. It doesn’t sound like much, but it can make a significant difference to your savings goals.
You can see for yourself by using a savings calculator on The New York Times’ website that is designed to show you what a one percentage point boost to your savings would do to your bottom line.
To use the one-percent calculator, you just need to share six figures:
In the example below, I assumed that an individual had an annual salary of $125,000, had saved $225,000, had saved 10% per year, and had a 20-year savings horizon.
If the investor didn’t boost his/her savings, the nest egg, assuming a five-percent annual return, would end with a balance of $851,766 after 20 years.
If the saver boosted his/her savings by one percent, the portfolio value would climb to $903,377 or an extra $51,611.
As the graphic dramatically illustrates, you’d enjoy the biggest bang for your buck by increasing your savings rate by a percentage point each year. In this example, that led to an extra $256,496 in savings!
Check out the calculator for yourself. It could inspire you to nudge your savings higher. Chances are that boosting savings so modestly each year would hardly be noticeable.