What does the 10-year head start (starting at 25 vs 35) actually produce in retirement corpus?
Scenario
Compare a 25-year-old vs a 35-year-old, both saving ₹10,000/month at 12% nominal returns until age 60
Inputs
- Late start age
- 35
- Retirement age
- 60
- Early start age
- 25
- Monthly sip INR
- 10000
- Assumed return %
- 12
Calculation
- 1.
Early start (age 25): Years to compound
60 − 25 → 35years
- 2.
Late start (age 35): Years to compound
60 − 35 → 25years
- 3.
Early start total nominal contributions
₹10K × 420 months → ₹42.00 L
- 4.
Late start total nominal contributions
₹10K × 300 months → ₹30.00 L
- 5.
Early start terminal corpus at 12%
₹10K × SIP-FV factor 6420 → ₹6.42 Cr
- 6.
Late start terminal corpus at 12%
₹10K × SIP-FV factor 1888 → ₹1.89 Cr
- 7.
Cost of 10-year delay
₹6.42 Cr − ₹1.89 Cr → ₹4.53 Cr
Conclusion
The 25-year-old contributes ₹12 lakh more in nominal SIPs but ends up with ₹4.53 crore (240%) MORE terminal wealth than the 35-year-old. The 10 extra compounding years are doing 80% of the work, not the contributions.
Tradeoffs
Assumes 12% returns hold across 35 years and the 25-year-old actually sustains the SIP — both non-trivial. The math is robust to lower returns (still ~3× advantage at 10% return); the discipline assumption is the bigger risk.