Your 20s are a huge time of change. Not only are you leaving academia behind for the real world, but you’re renting and buying properties, traveling, moving and maybe even getting married.

As you focus on the major milestones that lie directly ahead, you might lose focus on the ones way down the line. One huge accomplishment in your life will be retirement, and while it may seem like a faraway finish line, it’s one you should start thinking about now — yes, now.

Here are three huge reasons why saving in your 20s will pay off in dividends — quite literally — when it’s time to retire. We promise, you’ll be glad you started now.

1. You Have Nothing but Time — to Accrue Interest

When you start putting money away in your 20s, it will remain untouched on your end, but it won’t remain stagnant in value. That’s because it will accrue interest each year, adding more and more value to the initial amount you saved.

Imagine you started out with a savings of $1,000, to which your bank will apply a 4 percent interest rate. After one year, the amount in your account will be $1,040. It may not seem like a lot of growth, but your interest rate will continue to apply to the growing amount of funds in your account. So, at the end of the second year, you’ll have $1,081.60, 4 percent interest of your original investment, plus interest.

This growth could be even larger if you invest your money outside of your bank. And, if you do so in your 20s, you’ll give your investment even more time to grow and earn tens or hundreds of thousands of dollars in interest.

2. Your Efforts Mean More When You Make Them Sooner

You might be looking at your list of expenses and thinking, “There’s no way I can save hundreds of dollars each month when I have this much to pay for.” Between rent, student loans, gas for your car and everything in between, it might seem smart to put off saving until you’ve got these expenses under control.

But even a small amount you set aside each month in your 20s is worth so much more than larger amounts you might save later on. For example, if you save $100 a month for 40 years with a 12 percent interest rate, you would retire with almost $1.2 million in the bank. Someone saving $1,000 a month for 10 years, on the other hand, would have slightly more than one-sixth of that amount, around $230,000.

With that much padding in your account, you’ll be able to ensure you lead a comfortable life in retirement. Aside from housing in a development tailored to retired residents, you could travel, take care of your health and not worry about where the money was coming from.

3. You Can Make Even More Free Money



In a way, interest is free money. But starting to save in your 20s means you can take advantage of workplace benefits that are designed to build your retirement fund — benefits many 20-somethings don’t use to their advantage.

The best example of this is a 401K matching program. Not every employer offers this benefit, but they’re an incredible way to build and grow your retirement fund. That’s because your employer will literally match the amount of money you put into your account each month for free. And, one day, when you retire, you’ll have access to all that money — plus interest.

All this may be hard to envision now as you’re just entering into bona fide adulthood. But saving for retirement now is smart and will reap you huge rewards. Like we said before, we promise you’ll be glad you started early — all you have left to do now is save.