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When it comes to investing, time is your friend. The stock market returns an average of 9% every year when you look at it over decades. That doesn’t mean your money will grow by that much every year — there will be volatility — but if you invest in the stock market, your money will grow over time.

If you buy shares in good, stable companies or even shares in an exchange-traded fund (ETF) that tracks the Dow Jones Industrial Average, the Nasdaq, or the S&P 500 and you start early enough, you will become a millionaire with very little invested.

That has been true as long as the United States has had a stock market. You may not know anything about investing, but if you do it from a young age, time, and the magic of compound interest make you rich.

Because of that, it’s very important to ignore new research that focuses on something called the “Life-Cycle Model.” Put broadly, the study, which cites Nobel-prize-winning research from the 1950s that essentially says “don’t save money when you’re young and not making a lot, wait until you’re making more later in life when saving won’t hurt as much.”

That’s basically like saying, hey, you’re really busy in your 20s and 30s starting a career and family, why not hold off on exercise until later in life when you have more free time?

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What the Life-Cycle Model Says About SavingWriting for the “Journal of Retirement,” authors Jason S. Scott, John B. Shoven, Sita N. Slavov, and John G. Watson make the following basic argument

We argue that, under realistic assumptions, the life-cycle model implies that most young people should not save for retirement. First, high-income workers tend to experience wage growth over their careers. For these workers, maintaining as steady a standard of living as possible therefore requires spending all income while young and only starting to save for retirement during middle age.

Basically, they’re saying that higher-income workers can just save more when they have more money. They can, of course, do that, but it’s an argument that ignores the benefits of time and compound interest. The math is pretty simple.

If you invest $1,000 in the stock market at age 21, assuming a 9% annual return (the actual number is slightly over 10% with dividends being reinvested, you will have $52,677 after 46 years (at age 67). Invest the same $1,000 at age 41 and you’ll have $9,399. In fact, you would need to invest just over $5,500 at 41 to have the same money you would have if you had started early.

The numbers get worse if you add another $1,000 invested per year. Start doing that at 21 and you will have $678,540 at age 67 after 46 years. Do the same thing at 41 and you only end up with $111,122 after 26 years. And, if you want to catch up? That would mean saving about $6,100 per year.

Saving Early Is Hard but It’s the Right MoveIf you want to have roughly $2 million in your retirement account at 67, you need to save $3,000 per year every year between 21 and 67. Or, you could wait until you are 41 and save $18,300 per year to reach the same goal.

Choosing the latter route means that you’re deciding that $3,000 means more to your standard of living in your younger years than $18,300 will when you’re older. For that to be true you would need your income to be about six times higher while your expense ratio remains the same.

And, while young, early career people tend to make less money, often a lot less than more experienced folks, are you willing to bet your financial future on that happening?

The authors also argue against enrolling in company-sponsored 401k programs even if they match what employees put in.

“Finally, for all workers, low real interest rates make a front-loaded lifetime spending profile optimal. We show that the welfare costs of automatically enrolling younger workers in defined contribution plans — if they are passive savers who do not opt-out immediately — can be substantial, even with employer matching,” the group wrote.

That again ignores simple math. If your employer matches 3% for the first 6% you contribute, your $1,000 saved at 21 (assuming a 10.5% return with the employer half match) becomes $98,781.44 after 46 years. If you add another $1,000 per year at that level of return you end up with $1,127,786.71. To get to $2.2 million, at 67 you could invest $2,000 per year starting at 21 or roughly $10,000 per year starting at 41.

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