"#2 Reason you need to start saving money in a retirement account NOW: You need to take advantage of the fact that you’re still young and reap the benefits of compounding.
What the &*(*&%$# is compounding? The simplest way to put it is: if you wait until you’re 40 to start a retirement fund vs. starting at 33, you’re giving up almost $170,000 when you are 59 1/2 years old (the age when you can take your money out of your retirement account without paying a fee).
Say you contribute $5,000 per year (to either a 401(k) that your employer provides you or an IRA that you set up yourself, don’t freak, I’ll talk with you below on how to do this) and that money earns 7% per year from the time you’re 33 until you’re 40. You now have $43,000 when you’re 40.
That $43,000 that you are giving up between when you’re 33 and 40 adds up to giving up $170,00 by the time you’re 60. Guess why? Compounding."
