I first heard a version of this story at the unlikely place of a deer camp. The teller of the tale was a self- made millionaire (he had a string of Shakey’s Pizza restaurants, anybody remember those?) and for a hobby taught at a local community college. His story is as follows:
Twin brothers, who had not seen each other since graduating from high school, happen to meet on a beach in Hawaii on their 65th birthday.
Brother #1: “I have always felt so guilty. You became an auto mechanic, whereas I became a lawyer. I went to Harvard Law School and started putting $5,000 into an IRA at age 28. I now have over $1,000,000.”
Brother #2: “No worries. I started my IRA at age 18 and stopped contributing when I was 27. I too have over $1,000,000 and I live here.”
Of course, there are problems with this simple story, namely:
- It is not possible to earn a steady 8% per annum. Volatility can reduce final value.
- Inflation is not taken into account.
Even with these problems, the moral is a good one-start saving early. Experience what is known as “the miracle of compound interest.”
 Assumes 8% per annum growth.
Calculations provided upon request