The Costliest Five-Year Pause: How One Startup Owner Lost Over $500K in Retirement Savings—And What You Can Learn From His Mistake

Fifteen years ago, Jason Carter* was all in on his dream. At 35, he left a stable corporate job to launch his own tech startup. Like many founders, he poured every spare dollar into the business, convincing himself that once things took off, he’d have more than enough to catch up on retirement savings.

For five years—from ages 35 to 40—Jason didn’t contribute a single penny to a retirement account. No 401(k), no IRA, nothing. Every financial resource went into building the company. By 40, the startup was finally profitable, and he started contributing to retirement accounts again. He assumed that those lost five years wouldn’t make much of a difference in the long run.

Now, at 55, Jason is starting to see the real cost of that decision.

The Half-Million-Dollar Shortfall

To put it in numbers, let’s look at what Jason missed out on. If he had contributed just $10,000 per year during those five years—invested in an aggressive equity-based mutual fund earning an average of 10% annually—here’s what that money could have grown into:

  • By age 40, his total contributions ($50,000) would have already grown to about $65,000.
  • By age 55, those investments would be worth approximately $200,000.
  • By age 65, assuming the same 10% growth rate, that money would have ballooned to about $520,000—without adding another dime.

That’s half a million dollars of retirement security—gone.

The Impact on Jason’s Retirement

At 55, Jason and his wife, Lisa*, are now planning for retirement. Their two kids are in college, and while the business is still running, Jason is realizing that his retirement savings aren’t where they should be. If he had that extra $520,000 growing in his portfolio, he could retire comfortably at 65, taking withdrawals while letting the rest continue compounding.

Instead, he’s now faced with some tough choices:

  • Work longer—likely until 70—to make up for lost time.
  • Scale back his retirement lifestyle to stretch his savings further.
  • Take on more investment risk in his late 50s and 60s, hoping to accelerate growth.

None of these options are ideal. And they could have been avoided with just modest contributions during those early years.

The Lesson for Today’s Founders

If you’re a business owner in the early stages, Jason’s story is a cautionary tale. Yes, your business needs cash flow, but your future self needs financial security. Even if it’s a small amount, prioritizing retirement savings—through a SEP IRA, Solo 401(k), or even a Roth IRA—can make an enormous difference down the line.

A few thousand dollars invested now could be worth hundreds of thousands later. The worst mistake you can make is assuming you’ll “catch up later.” Time is the most valuable asset in investing, and once it’s gone, you can’t get it back.

Don’t let your startup success come at the cost of your future. Pay yourself first—even if it’s just a little—and let compound interest do the rest.

Want to ensure your business and retirement stay on track?

At Palmer Financial Wellness, we help founders build both a thriving business and a secure financial future. Let’s create a plan that works for today and tomorrow.

(*- not real name)

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