“Make money on your money” is the concept behind compounding. Compounding is when the money you earn from your investments is reinvested for the opportunity to earn even more.
By investing in a retirement plan, you can get even more benefit from the power of compounding with tax-deferral. Your retirement account has the potential to grow faster because the money you would have paid in taxes on earnings each year remains in the account and can earn additional money.
Keep in mind, though, that while compounding can make an impact over many years, there may be periods where your money won’t grow.
The earlier you start, the longer your money has the chance to compound. Use our investment calculator to find out how much your retirement dollars could grow, given the benefit of time.