You have to save for retirement.

This is a statement you've probably been hearing since you were a teenager, or perhaps even earlier. Yet despite the fact that Americans know they need to save for retirement, many are often woefully unprepared when the traditional retirement ages of 62 or 65 roll around.

According to a 2016 report from the Insured Retirement Institute, 55% of baby boomers had money set aside for retirement, implying that 45% didn't have a red cent saved for their golden years. This coincides pretty well with data from GoBankingRates in September that found 69% of Americans had $1,000 or less in their savings accounts (including about a third with $0)! In other words, we absolutely stink when it comes to saving money.

A man emptying a piggy bank and finding very little saved.

Image source: Getty Images.

What we are good at is making excuses for why we haven't saved for retirement. Whether it's high levels of debt, ongoing expenses, the cost of going to school, or the simple belief that you'll be able to save later and make up the difference, there are always justifications for why people aren't saving for retirement. However, putting off saving for retirement even a few years could mean the difference between a comfortable retirement and outliving your money.

There's more to retirement than just saving money

It's important to understand that saving for retirement is about more than just taking money out of your paycheck. After all, putting it under your mattress does no good, as inflation would devalue the worth of your savings in more years than not. How you put your money to work makes a big difference.

Generally speaking, the stock market has been one of the most consistent creators of wealth over the long-term. Including dividend reinvestment, the stock market has returned an average of 7% per year. This is comparatively higher than the returns you'd see in housing, bonds, bank CDs, and commodities like gold and oil over the long run. This isn't to say you shouldn't diversify your nest egg, but it does suggest that over time high-quality companies tend to increase in value, and that investing in these high-quality companies, or a high-profile index fund, should allow you to handily outperform inflation.

A rising stack of coins flanked by a man holding a stopwatch, implying the importance of time and compounding.

Image source: Getty Images.

What many Americans often overlook in the whole saving and investing for retirement process is that much of your wealth creation comes on the back end. This is because compounding provides greater leverage and gains as time passes. Within your first few years you won't have much set aside to invest, so any gains will be rather small. But after three or four decades of putting money away, your investment gains will have hopefully compounded into a pretty sizable nest egg that'll last you throughout your retirement.

If you start saving late, prepare to face the consequences

But the thing about compounding is that it can be very deceptive. Consumers have a hard time comprehending how an event that's 25, 35, or 45 years away (e.g., your retirement) could impact them. After using Bankrate's retirement plan calculator, you'll quickly understand how delaying your retirement for even three years could be catastrophic.

Using Bankrate's retirement plan calculator, I plugged in the following variables:

  • Age of retirement: 67 (since this is the full retirement age of workers born in 1960 and after).
  • Annual household income: $50,000 (This is a rounded approximation of the average annual household earnings in America).
  • Annual retirement savings: 5.5% (the personal savings rate according to the St. Louis Federal Reserve as of Jan. 2017).
  • Rate of return before retirement: 7% (the long-term return of stocks, including dividend reinvestment).
  • Current retirement savings: $0.
  • Expected income increases: $0 (for the sake of simplicity).

The only real variable we're going to toy with is the age where our fictitious saver begins socking away money.

For the first example, let's assume our fictitious saver begins putting 5.5% of his or her income away at age 22, the first year out of college for most Americans. This gives our individual 45 years to work, save money, and invest with an average annual return of 7%. Upon retirement, per the calculator, this individual would have almost $732,000.

A man frustrated by his finances with his head resting on his hand.

Image source: Getty Images.

Now, let's change the starting age at which our fictitious saver begins putting money away to 25 -- just three years later. You might imagine the difference would be negligible, but because compounding provides those greater returns over time, our saver only winds up with around $590,000 upon retirement. That's a more than $140,000 reduction just for putting off saving for retirement by three years based on the above variables for the average American!

What's more, assuming that you need your retirement income to replace about 80% of your annual working wages, the individual who began saving at age 22 would have a nest egg that'd be estimated to last until age 87, or 20 years after they retire. The procrastinator would run out of money by age 83. Admittedly, this doesn't factor in Social Security income, which would certainly help out, but it nonetheless further illustrates the price you'll pay with the "I'll save later" mentality.

Two easy steps to save more now

Now for the good news: there are two very easy steps you can take to improve your saving habits and ensure you're not leaving a five-, six-, or seven-digit dollar amount on the table because of procrastination.

The first step involves setting up a workable monthly budget that allows you to better understand your cash flow. According to a 2013 Gallup survey, only a third of U.S. households had detailed monthly budgets, making it incredibly difficult, if not impossible, to maximize their ability to save.

A budget next to a calculator on a table.

Image source: Getty Images.

Online budgeting software is, in many instances, free, and it can really help take the pain out of formulating a budget. Online software can handle all of your calculations to ensure accuracy, and if you input your dollar or percentage savings goal for each month, the software can help formulate a plan to achieve your goals. Having a measurable and specific savings goal in place should allow you to adjust your spending habits on an as-needed basis in order to meet your long-term retirement savings goal.

The toughest part, in my opinion, isn't creating a budget -- it's sticking to it. That leads to the second easy but meaningful action you can take right now: setting up an automatic withdrawal to an investment account. Whether it's done on a weekly, bi-weekly, monthly, or even quarterly basis, having a specified amount of money taken out of your savings account or paycheck and moved to a retirement/investment account will essentially force you to remain honest to your budget, and it takes the procrastination excuse completely out of the equation.

Really, the only question left is what are you waiting for?