What can 10% do?

Krista Bartkow - Feb 25, 2022

Do you remember your first job? That first paycheque you got and the “huge” amount on it. I’m old enough to have received an actual cheque from my first employer – these days money is all digital and paycheques are direct deposits.


This blog post is about habits and what a 10% habit can do for you long-term. I have a 17-year old son who I am trying to help develop good habits, especially financial habits. As far as savings goes, it is much easier to “squirrel away” money before we get used to having a certain income as opposed to “carving it out” from existing spending. That’s why advisors will always suggest saving a certain percentage of any bonus or raise that you receive. If you get a 10% raise, simply save the first 10% of that and you’ll still have a great improvement on your lifestyle spending.

If income is $60,000 and a 5% raise is received ($3,000), simply direct 10% of this raise ($300) to long-term saving – you’re still left with $2,700/yr in new spending!


So what can 10% do for you long-term? Simple answer is A LOT. Using two income levels, $60K and $75K and different starting ages, the following charts show the projected nest egg at age 65:

Starting at age 35
Income Save 10% Balance @ Age 65
$60,000 $6,000 $418,000
$75,000 $7,500 $523,000


Starting at Age 45
Income Save 10% Balance @ Age 65
$60,000 $6,000 $208,000
$75,000 $7,500 $260,000


To provide some reference, assuming growth at 5%, in order to fund retirement income of $40,000/yr for a 30-year period, $645,000 is needed at age 65.


Point is, when it comes to investing and the power of compound interest, time can either be your friend or your foe – if the habit is developed early, time can be the greatest friend you have.