Explaining Compound Interest | Money

As yak explained, it’s nearly impossible for most FOs to hit the $270k income threshold required for the 16% contribution to hit the IRS annual limit.

The system is a catch-22. You need the max contribution as early as possible to get the compound interest ball rolling. The irony is you don’t typically get there until later on. For the furlough guys and more so the double furloughs it’s huge. Getting furloughed for a year or three with 25 years left, and $300-500k in your retirement is orders of magnitude more recoverable than only having $70-100k in there when you hit the street awaiting recall.