When to Start Investing for Retirement

By in Guest Post, Investing, Retirement, Saving, Wealth | 8 comments

Age Ain’t Nothing but a Number: Why It’s Never too Early to Start a Retirement Fund

By guest contributor, David Moran

Postponing retirement saving 20 years could cost you about three-quarters of a million dollars

The Benefits of Setting up a Retirement Fund (Early)

So, you’ve finally landed your first real job. Or maybe you’ve just graduated. Like so many who came before you, you’re finally beginning to understand that those long conversations about responsibility and life from your professors and parents were necessary – the real world is serious! (Don’t you wish you were listening more carefully?) As you start to accept and deal with the harsh realities of the world – nothing in life comes easy, and it’s definitely not free – you realize that hard work compliments financial success.

Unlike your elders (grandparents and great grandparents), counting on pensions and the promise of social security is a thing of the past. Ergo, the best way to survive in the world today is to set aside funds to put toward your future stability.

401k information

Invest for Retirement Today

What is a 401(k)?

“A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.” What is a 401(k)Wall Street Journal 

As one of the most popular retirement savings plans to date, setting up a retirement fund makes it easy to save your money for the future while giving you tax breaks in the process. The amount of time you’re projected to spend in retirement is too significant to ignore. Therefore, the sooner you start saving for your retirement, the more comfortable you’ll be during your golden years.

Benefits of Saving for Retirment Early

I realize that your recent graduation from college has you transitioning into a real world entry-level job, oftentimes starting at an annual salary around $30,000. It’s exciting right? Living on your own, paying your own bills, embracing your independence. So, basically, it’s safe to assume that you’re broke…and that’s okay. I understand why you feel like you can’t save what little money you have as you watch your debts accumulate quickly and dangle over your head.

What if I told you that postponing 20 years before you start saving for your retirement would cost you about three-quarters of a million dollars? Yeah–now I have your attention!

Here are some benefits for young workers (like yourself) to start planning and saving early:

Tax Advantages: It’s a wise decision to start a retirement plan as soon as possible because the money you will invest is pre-taxed. This means you’re not paying income taxes on the amount you invest. You’ll save more, watching it accumulate and grow over time. In short: FREE MONEY.

Time: Don’t wait until you can afford to save money for your future. Instead, try putting six percent of each paycheck into your 401(k). Creating a savings plan in your 20’s promotes and provides you with a comfortable retirement in your 60’s. As a young person, your best and most important advantage you have is time. In order to have money later in life, start saving now and watch it grow.

Compound Interest: Take advantage of your youth and benefit from compound interest. If you start saving at the age of 25 with a tentative plan to retire at 65, you’ll be able to experience 40 years of compound interest. Why is this awesome? Because not only do you earn interest on your initial amount of money, but you’ll also acquire more interest on top of that. In other words: compound interest equals free, legal money!

Matching 401(k) Contributions: If you’re lucky enough to land a job that offers a company 401(k) plan, I advise that you enroll today and take advantage of employee benefit immediately. Although not required by most companies, your employer will match a portion of your contribution to your 401(k) account. If you decide to opt for enrollment, you’re basically turning away from free money.

I’ll leave it up to you to make the wise choice.

Easily Transferable: A major advantage of setting up a retirement fund early is its ability to transfer funds from one plan to another easily. Without any hassle or issue, you’ll be able to rollover your funds to a new account should you acquire a new position at another company. Or you can transfer the funds into a self managed Roth IRA, upon switching jobs.

Additional Security: Acknowledging that social security was never intended to serve as a sole source of income to sustain a comfortable life for a retired person, creating a retirement fund as soon as possible relieves you from potential stress when you’re older.

Replace the struggle and the stress of your future with financial security and comfort, and start saving for your retirement. Start your adult life on the right path as you pave the way toward a lifestyle you’ll enjoy.

When to start saving for retirement? Now!

David Moran is good with money, photography, and “Call of Duty.” David is the publisher of the new money blog, Finance for Your Future. He currently lives with the love of his life and three rad kids in Chicago.

Have you started saving for retirement? If not, what’s stopping you?

image credit; 401k google images info_osullivancreel


  1. You can never start early enough. The advantage of saving early with a tax deferred account is you save taxes along the way. I started saving and investing before there was a 401K. I believe in multiple income streams which includes retirement accounts and brokerage accounts. Principally for the tax advantages of capital gains on brokerage accounts.


    November 4, 2013

  2. I agree! It’s wonderful you had the knowledge and wisdom to make those decisions. I still remember after being in America for a few years, hearing my dad talk about this ‘401k thing'(I was in my early teens). He was excited to learn all he could, and from that moment he contributed up to the employer match. He was also upset because he was learning about it in his 40s, and the idea of starting early stayed with me since.

  3. I started investing in a company 401k as soon as I started after college, I only wish I started investing when I started working at 16! The time value of money is your best tool to grow your money!

    Paul @ The Frugal Toad

    November 6, 2013

  4. I can relate to this post, I wish my parents had started a pension fund for me. In the UK we have a junior SIPP (Self Invested Personal Pension), you can open this after a child is born. I’ve already opened an account for my new son and have started contributing into it, hopefully by the time he’s ready to start working he’ll already have a significant pension pot already. This was a great post, thanks for sharing..

    Imran @ Xomba

    November 6, 2013

    • @Imran-I couldn’t agree more. It’s so nice to set a bit of “start up” cash aside for one’s child. We did that (along with my parent’s) for our daughters college and starting out expenses.

      Barbara Friedberg

      November 10, 2013

  5. When it comes to retirement it really is difficult to save too much or start early enough. The more to put away now, given the compound interest you mention above, the better and early you can retire if you’d like to. Great summary!


    November 6, 2013

  6. You are right. It is never too early to start investing for retirement. When we are young, we can earn more money than our daily expenses.Sometimes we spend money on unnecessary things such as buy clothes that we do not really like and then throw them away. We should save that amount of money to put in our retirement fund.


    November 11, 2013


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