Many first-time jobholders focus on their current needs and purchases such as housing, transportation, food and clothing. Often, feeling that time and youth are on their side, they neglect to invest for their future. But there is no better time to begin saving for retirement than when you start working.

With time on your side, it takes a smaller regular investment to build your retirement nest egg. Your investment has more time to grow and to overcome economic downturns. You have fewer obligations that require significant portions of your paycheck — mortgage, children, etc. Therefore, you can devote a larger share of your income to savings.

Investing Younger Maximizes Your Retirement Savings

For example, a 25-year-old investor contributes $267 a month for five years in pretax contributions to an employer-sponsored tax-qualified retirement plan. Assume his investment receives an 8% annual return. By age 65½, his outlay of $12,000 would have grown to more than $300,000!

However, if that person did not start investing until age 35, he or she would have to make the same monthly contributions for 15 years for a total contribution of $26,000 to reach the $300,000 goal.

Moreover, a 45-year-old investor would have to contribute $65,800 to accumulate the same $300,000, and would not reach that goal until past age 72. That is how costly procrastination can be.

This example is hypothetical, does not reflect the return of any specific investment and is not a guarantee of future income. Fees and charges, if applicable, are not reflected in this example and would reduce the results shown. Income taxes are payable upon withdrawal. Federal restrictions and tax penalties may apply to early withdrawals.

What Do You Do When You Are Ready To Start Saving For Retirement?

So you have settled in comfortably at your first job and you're convinced of the need to start saving early. What do you do?

Begin by determining a personal budget. Figure out how much you will need for basic needs such as shelter, food, clothing, healthcare and transportation. Don't forget to factor in optional expenses such as entertainment and vacations. Then calculate how much you can comfortably afford to save every month for emergencies and your retirement: the more the better.

Also, analyze your paycheck and the tax advantages of saving with a tax-qualified or tax-deferred retirement plan. Find out if your employer offers a retirement savings plan. As soon as you are eligible, enroll in a 401(k), 403(b), 457(b) or other tax-qualified plan.

Once you have enrolled, contribute regularly and increase your contributions proportionately as your income rises. Where possible, contribute to your employer-sponsored retirement plan via payroll reduction. It not only automatically invests a pre-set amount in your account, but also helps reduce your income taxes.

Revisit your retirement savings plan on a regular basis. Ensure that the plan is working to meet your financial and savings goals.