When it comes to the question of “when should I start saving for retirement?” the rule of thumb is pretty simple. You want to begin saving as soon as you can and when you feel you are ready. The ideal time being in your twenties when you score that big job and start earning paychecks.

The sooner you begin putting money away into retirement, the more time you will be able to grow that fund, and your gains for one year can create their own gains for the next year and so on. This is known as compounding or generating interest from previous earnings.

For example, let's say you start your retirement fund at the age of 25 and you put $3,000 into it each year until you are 35, investing a total of $30,000, then you stop putting money into it all together. When you reach the age of 65 your funds will have increased to roughly $338,000.

If you start doing this when you are 35 and you invest $3,000 a year for 30 years, when you are 65 your funds will have grown to only about $303,000 .

When You Begin to Save

Starting your retirement fund in your mid-twenties may be tough when you have things like student loans and rent to budget for, but it will pay off in the future. It is ideal to put away somewhere around 10% to 15% of your annual salary into retirement, but no need to fear if you are unable to put that much aside in this stage of your life.

If you can't afford 10% just start saving what you can afford, your future will not be doomed if you can't put 10% aside. Starting at five dollars a month and increasing each month by an amount you can afford, until you can stash away 10% to 15%, is perfectly okay.

You can always take advantage of any extra or unexpected cash you earn to help grow your retirement savings. No need to stress though, just save as much as you can or are comfortable with. Here are some more strategies you can utilize to help you start saving early:

• 401 (k): If your company has a 401(K) in its benefits package, sign up as soon as you are eligible, especially if your employer will match the contribution to a certain percentage.
• IRA: If your company doesn't have a 401(k) option, you may want to think about establishing an Individual Retirement Account or an IRA. There are two types of IRAs; a Roth IRA or a Traditional IRA, both can help you to grow your money when you make regular contributions. However, they have different tax conditions:

• Traditional: Your contributions are tax deductible in the same year that they are made.
• Roth: Your withdrawals in retirement are not taxed and early withdrawal rules are more flexible. Also, withdrawals can be made at any time.

You Got This!

Saving for retirement can be a stressful financial move to make and is one of those things that can easily fall to the wayside, but don't let it. Starting to save for retirement early on is much more doable than you may think.

As long as you are honest with how much you can afford to set aside for retirement and start as early as you can, your golden years of long walks on the beach and sleeping in every day are everything you've hoped for. If you have any questions feel free to contact us!