So you're gearing up for that walk across the stage, those last photos with the university president, and the start of your career. Not exactly a prime time to ponder retirement, is it?

I say it is.

Time is on your side, my friend. With your bachelor's, master's, or doctoral degree in hand, you're ready to embark on a career that can yield the retirement of your dreams -- and in quicker fashion than you might imagine. If you trade the magic of late-night caffeine for the magic of compounding (or, hey, why not keep both?), you can work wonders in your retirement savings. Just think -- if you, as a 25-year-old graduate, save just $200 a month and earn 10% a year on your money (a totally reasonable goal), you would have $1.26 million by the time you turn 65! Here's how.

Start your 401(k). Now.
I know. You've been out of school for only a few weeks and are finally beginning to pick up the financial pieces of your life. You've got business clothes to purchase, after all, and celebratory dinners to buy. Perhaps you'd like to take a vacation that doesn't involve the nearest beach and maybe even treat dear old Mom and Dad, or your closest friends (hint, hint), to a weekend away from the norm.

But hear me out. Your 401(k) is perhaps the single most important step toward a financially secure future. Many employers offer a company match for at least a portion of your contributions, so opting out of the program is literally walking away from free money. Would you ignore $100 lying on the sidewalk? Then why would you even think about opting out of such a sweet deal? (Check out our 401(k) Center for more reasons why you can't afford not to sign up.)

As a recent graduate myself, I know what you're going through. There are hundreds of places I'd like to visit and items on which I'd like to spend my money. And on the flip side, the 401(k) handbook that came with my Motley Fool employee packet seemed flat-out daunting at first. So many investment options! Not to mention that the word "401(k)" just seems so ... old.

But I took the plunge. I wanted some exposure to stable behemoths such as GE (NYSE:GE) and ExxonMobil (NYSE:XOM) -- the two largest companies in the world by market cap -- so I put an S&P 500 index fund to work in my portfolio. Those two giants make up more than 5% of the holdings. I wanted in on the promise of biotechnology; one of my funds is weighted 18% in health care, and TevaPharmaceutical (NASDAQ:TEVA) makes up nearly 2% of all its holdings. It's also an aggressive portfolio, and seeks growth from UnivisionCommunications (NYSE:UVN) and Hilton Hotels (NYSE:HLT).

So I say suck it up. Take some time to fill out your company's 401(k) forms and get the ball rolling. If you start from the beginning, the paycheck deductions won't hurt a bit, since you'll never know what you're missing. If it means you have to forgo one of those fancy-shmancy meals or travel to a slightly less exotic vacation destination, so be it. Your future is much more important -- and it's coming in a hurry.

Remember the issue of compounding I mentioned earlier? If you delay putting money into your 401(k) for just 10 years, you could lose half of that million-dollar windfall. See for yourself:

Start age Savings by age 65
25 $1,264,815
35 $452,097
45 $151,873
55 $40,968

The bottom line is, if you snooze, you lose, especially when it comes to your 401(k).

Get out of debt
If you're like most students, including the university graduate I am now married to, you've emerged from the ivory towers via a staircase of loan debt. That's OK -- your career, with any luck, will make those loans a sound investment. But you've still got to free yourself. And if you've left the classroom with credit-card debt as well -- did you fall for one of those "Free T-Shirt With Sign-Up!" promotions near the university bookstore? Me too! -- then you're going to have to work double time to regain your financial independence.


The short answer is: Spend less and save more. But that's easier said than done. I know all too well the allure of U2's new CD or a nice pair of $89 Dr. Martens in a U.K. size 7. But if you've got credit-card debt, you've got to cast out your spending demons and embrace your frugal inner self.

Get a second job that you can spend time with during odd hours -- an opening or closing shift at the local coffee shop, a stint as a stock clerk at your local supermarket, or even something you can do working from home. Do you have a crafty talent you can share with others? Open up your home for informal knitting, painting, or piano lessons. Do you have excess junk lying about -- CDs, DVDs, concert souvenirs, and those schoolbooks that you skimmed once while reclining in a living-room chair, glasses askance, head sagging in slumber? Try selling them on or eBay. While each item isn't likely to pay off your debt, every little bit really does help.

If you need more suggestions, venture on over to the Fool's Credit Center. Or consider visiting the Consumer Credit/Credit Cards discussion board to ask questions and get ideas tailored to your own needs.

Admittedly, debt is a more unwieldy beast than your cute little 401(k). But it's no less crucial to tackle debt than to fill out those forms after your first day on the job. When your credit is unencumbered, you'll have more available cash. And when you have more available cash, you'll have more opportunities to ...

You've got a ton of choices when it comes to your personal savings. First and foremost, start an emergency fund so you won't have to rely on credit in an emergency (i.e. a sudden illness, a broken-down car, a leaky dishwasher, a coughing kitty). Over time, try to put away three months' worth of wages, which will probably take a while to accrue. Don't worry about socking away large chunks of each paycheck -- you do want to have enough to live on without sitting in the dark or going hungry. Your student days are behind you, after all.

Once you get your emergency fund stocked with enough money to carry you through most misadventures, consider your other, more long-term savings options. Since you've gotten so good at contributing to your 401(k), why not up the ante and open an IRA? It serves as another retirement savings vehicle and comes in two flavors: the traditional or the Roth IRA. Visit our IRA Center to find out which one works better for you.

Also consider a destination for some longer-term savings that you'd like to access prior to retirement. Lower-risk possibilities include money market accounts, certificates of deposit, U.S. government bills and notes, I-bonds, and municipal bonds. These investments don't yield much, but that's OK since you want to stash savings in low-risk places.

The Foolish bottom line
There's a lot to do when you turn in your cap and gown, pay those last library fines, and leave the sprawling university campus behind. Retirement can easily become buried under more immediate concerns: embarking on a career, purchasing supplies for a non-student existence, perhaps transplanting to a new city. But with some careful planning on the front end -- a few hours spent on 401(k) forms and investment plans never killed anyone -- you can set the ball in motion with minimal effort.

For more retirement ideas, check out Robert Brokamp's suggestions in our Motley Fool Rule Your Retirement newsletter. With a 30-day free trial, you've got nothing to lose! Check it out by clicking here.

And when you're playing shuffleboard, traveling to Thailand, or even -- gasp -- pursuing another college degree in 35 years, you won't have to worry about finding a benefactor. The hard work will be behind you, and you can reap the rewards.

Hope Nelson-Pope, a proud graduate of Florida State University, is online coordinating editor at The Motley Fool. Hope does not have a financial stake in any company mentioned in this article. Fool rules are here .