How the The Cost of Waiting works
We compare the future value at retirement of the same monthly contribution started today versus started after a delay. The difference is the "cost" of waiting — driven almost entirely by the compounding years you give up.
Step by step
- We treat your contribution as a level monthly deposit (an ordinary annuity).
- Start now: the deposit compounds for all the months until retirement.
- If you wait: the same deposit compounds only for the months that remain after the delay.
- Cost of waiting = (start-now value) − (delayed value).
The math
FV = PMT · (((1+i)^n − 1) ÷ i), with i = annualReturn/12 and n the number of contributing months; cost = FV(now) − FV(delayed).
Sources & assumptions
- Public-domain future-value-of-an-ordinary-annuity formula. The growth rate is a shown, configurable assumption.
Note: Nothing proprietary.
- An educational estimate using a level monthly contribution and the growth assumption shown with your results; actual returns vary and are not guaranteed. Not advice.