Retirement Planning in Your 20s

When you're in your twenties, the retirement-planning to do list is pretty simple:

1. Save some money.
2. Save some more.

In fact, the toughest thing for twenty-somethings is believing they should start now. If you think you're too young to bother with retirement planning, you're definitely not alone.

The thing is, you might eventually wish you had done things differently. There are a lot of older people out there who have big regrets that they waited so long to start saving. That could be you in twenty years.

Here are four common reasons twenty-somethings don't save for retirement:

"I'll have more money later on."

Sound familiar? There's just one thing: You'll also have more expenses, like mortgage payments and the costs of raising kids. Saving will feel just as hard then as it does now—if not harder.

You can start saving with just a few dollars a week. Get used to how that feels, and then see if you can squeeze a couple more bucks out of each paycheck.

If you stash $10 a week from age 20 to 30, and earn about 4 percent a year, you'll have $7,012. Keep up the habit until you're 65, and you'll end up with almost $66,000. Not too shabby, especially considering you'll barely miss the money.

"There's still plenty of time to save."

You're right. Thanks to the power of compounded growth, the sooner you start to save the sooner the money you put in plus the investment earnings on that money will begin to grow.

"I want to have fun while I'm young."

You'll want to have fun later on, too. Start small, and you can build a nice nest egg while still doing the things you love—now and later.

"I'm barely getting by!"

It's easy to feel that way, but are you really? If you eat out, have cable TV, buy music, or hit the town with friends, the fact is that you've got some spare cash. No one is saying you don't deserve those things. But you also deserve to be honest with yourself: You're choosing to spend some of your money rather than saving it.

When you decide to start saving, the stuff you identify as "optional" will be the first to get cut. So it's important to know which expenses are optional and how much they add up to.