The earlier you begin to save for retirement the more you will benefit from the compounding of your investment returns.

Consider this illustration.

Jane and James each graduate from college and begin working at age 22. They each earn $45,000 a year. Jane saves 10% of her earnings in a Roth IRA while James finds a way to spend all of his earnings. At age 30 Jane stops contributing whereas James seeing the error of his ways begins to contribute $4,500. Each investment portfolio earns 8% total return/year.

Here is the amazing thing. It isn’t until age 63 that James has more money in his account than Jane even though James contributed $153,000 to Jane’s $36,000

There are many ways to save money for retirement.

There are Roth and Traditional versions of

• 401k
  
• 403(b)
  
• IRA
  
• SEP IRA
  
• SIMPLE IRA

As well as non-tax-qualified investment accounts.

In addition there may be employer provided defined-benefit plans or cash balance plans.

Finally there is Social Security.

In addition to planning for income in retirement it is important to give consideration to the cost of healthcare in retirement.