Haven't Turned 30 Yet? You Can Still Save $1.4 Million Before Retirement

saving in your 20s

Use age and interest rates to your advantage

Charlie Shipman, managing principal at Blue Keel Financial Planning , works with Gen Xers and millennials and recommends starting a retirement plan early with a small monthly savings amount of $100. "Such a small amount can easily be compared to a cable bill, gym membership, or one night of dinner and drinks," he said.

"Assume a rate of return of 8% ... the average for the stock market," Shipman said. "A person in their 30s will end up with over $200,000 at retirement. A person in their 40s will have just under $100,000 after 25 years, and a person with 15 years until retirement will only have about $35,000."

By saving and investing when you're young , your money can grow exponentially over time because of compound interest. The longer your money gathers interest, the better. Waiting just five to 10 years can significantly impact your savings. "A retirement plan saving $350 per month at age 25 and increasing that savings amount by 2.5% per year ... earning a non-guaranteed 7% return ... would have about $1.4 million at age 67," said Jeffrey Bogart, registered investment advisor and president of Sila Wealth Advisory .

"If that same person waits to age 35 to start saving ... they would have about $654,000 at age 67, so waiting 10 years costs about $754,000," said Bogart. "If someone who is 35, who is just starting to save and wanted to have that same $1.4 million end amount, they would need to save $725 per month, while a 45-year-old would need to save $1,850 per month," he said.

Don't ignore corporate benefits

One key to retirement saving is corporate benefits. "Have a percentage of each paycheck, rather than a dollar amount, contributed automatically to your 401(k) or other employer-sponsored retirement plan," said Shipman. This way, the amount that you save will grow along with your salary.

The average employer using a retirement plan from Fidelity Investments, the largest U.S. retirement plan provider, now contributes about $3,600 per year to an employee's retirement account, which is up from $2,800 in 2007, according to Bloomberg. Find out how much of your salary contributions your company will match and contribute at least that amount. Otherwise, you are "leaving free money on the table," said Shipman.

Consider a Roth 401(k) if you have money left over that you would like to save. A Roth 401(k) account can allow funds to be withdrawn tax-free during retirement, and it is a relatively safe investment.

Customize your strategy

When you're in your 20s, you have the luxury of time when it comes to retirement savings, and you can assume more risk because you have time to recover any losses you might incur. Millennials tend to pick more individual stocks based on brands they're familiar with than older generations but generally create well-diversified portfolios, according to U.S. News.

As you diversify and take on risk, remember to factor in how much time you have until retirement. It is possible to be too conservative with your investments, especially in your 20s.

This article originally appeared on gobankingrates.com .

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