You don;t seem to understand arithmetic. You wrote: " 2 investors each invest 5000 per year. Investor 1 starts at 17 and invests until age 29 then never invests again. Investor 2 starts at 29 and invest until 59. Investor 2 will never come close to catching investor 1."
A fourth grader could spot at least 10 problems:
1. 12 years x $5K = $60K so interest on $60K for the halted investor must exceed $5K per year - that's 8.3%. But the risk-free rate of return is less than 1%, it's been there for 3 years, and that isn't going to change any time soon.
2. You're assuming 0% volatility. What if the second investor started in 2009 and the first investor started in 1997 and was out in 2009? So the first investor lived through 2 major market crashes and the second investor began investing at a low point in the market.
I assume you get the idea but there are at least 10 more serious problems. Are IBM retirees truly this stupid or is this some kind of joke?