Actually, years ago was the best time to start saving for retirement. As soon as you started earning income was the best time to save for retirement. But now is the second best time to start saving for retirement.
Don't wait until you have “enough” money to start a retirement account. Many brokerages offer you the ability to start saving for retirement with a rather low account minimum. You can pretty much start saving for retirement with any amount of money.
Get In The Habit
One of the best reasons to start saving for retirement now ist that you get in the habit. Even if you can only contribute a few dollars a week to a retirement plan, the fact of the matter is that you are developing the habit of setting aside that money.
Besides, you might be surprised at how much money you can “find” to set aside for retirement if you look around a bit. You can increase your income through creative means, or you can reclaim wasted money by cutting back on expenses. In either case, the result is to look for money that can be put toward the future.
However, you don't want to remain complacent about the amount of money you contribute to your retirement account. As your income increases, so, too, does the amount you should be able to put into your account. Periodically evaluate your retirement account contributions and make changes to the amount. But the idea is to start as early as you can, so that you develop the habit of setting money aside for retirement. The practice of thinking ahead with your money is a vital one to be in if you want to create a successful financial plan and achieve financial freedom.
Dollar Cost Averaging
When you start now, and put a regular amount aside as a retirement contribution, you are taking advantage of dollar cost averaging. This is a great way to affordable build up your retirement account, while getting the habit of saving. The idea behind dollar cost averaging is that you use the same amount of money each month to buy however many shares of an investment that you can.
In times when the market is down, your retirement contribution dollar goes further, purchasing more shares for less. (Of course, when the market is higher, you get fewer shares for your money.) This means that it actually isn't a bad idea to build your portfolio during times when the market is struggling. You'll be able to buy more shares, and later, as the market moves higher, those extra shares will be worth even more.
Put Compound Interest To Work For You
Another reason to start now is that you have more time for compound interest to work on your behalf. The sooner you start investing, the more time the interest you are paid has time to earn interest of its own. There are numerous studies and articles written about how starting just five or 10 years earlier can make a huge difference in the amount of money you ultimately end up with. Get started now, and your money will have more time to work on your behalf, resulting in a larger nest egg by the end.