Saving for retirement is often a matter of making sacrifices. After all, the money you lock away in savings could otherwise be used for discretionary purposes while you're young. You might, for example, opt to use that money for travel, or buy yourself more flexibility in covering your living expenses during your working years. But if you're willing to forego some instant gratification in favor of a more responsible approach to savings, you stand to benefit tremendously when retirement rolls around.

You'll need more retirement income than you think

Giving up near-term luxuries to save for retirement is a hard sell for 20- and 30-somethings. And it makes sense. When you're staring down a hefty housing payment, mounting expenses, and a pile of student debt, the idea of putting your discretionary income aside for the future might seem downright unrealistic. After all, how much should you really be expected to give up just to have a little extra cash on hand down the line?

Piggy bank with the words

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Here's the thing, though: Retirement probably won't be the low-cost, easy breezy existence you're expecting it to be. In fact, younger workers are often shocked to learn just how expensive retirement can be. Healthcare alone might set you back close to $9,500 a year over a 20-year retirement. And even if you manage to pay off your mortgage in time for retirement, there's a good chance you'll still be looking at close to $1,000 a month for housing when you factor in property taxes, insurance, and maintenance. In fact, you might face so many expenses in retirement that you wind up needing more money as a senior than you did during your working years.

Not convinced? Then consider this: According to the Employee Benefit Research Institute, 46% of households spend more money, not less, during the early years of retirement. For 33% of households, this trend lasts a solid six years. And roughly 25% of households wind up needing more than 120% of what they previously spent each year prior to retirement. When you think about giving up that weekly takeout order or annual vacation to buy yourself more financial freedom in the future, remember that doing so might end up being a matter of survival.

How much will your sacrifices amount to?

Another reason it's difficult to forego short-term indulgences is that some of that spending might seem rather innocuous. After all, if you pack your lunch a few times a week rather than buy it, how much good will that $30 in weekly savings do you down the line?

Well, every dollar you save today has a lot more of an impact than you'd think thanks to the power of compounding. When you sacrifice certain luxuries today, you get to invest that money on a long-term basis and ultimately grow it into a much larger sum.

If you really want to see the impact of saving for retirement versus having fun with your money today, this tool can show you just how much you stand to gain by going the responsible route:

 

* Calculator is for estimation purposes only, and is not financial planning or advice. As with any tool, it is only as accurate as the assumptions it makes and the data it has, and should not be relied on as a substitute for a financial advisor or a tax professional.

To use this calculator, simply input the cost of the item or items you're willing to forego. Next, indicate how many years you have until retirement, keeping in mind that if you were born in 1960 or later, your full retirement age for Social Security purposes is 67.

If you're giving up a long-term recurring charge (say, a monthly gym membership), you'll also be asked to estimate its annual inflation. And while it's hard to pinpoint that exactly, 3% is a pretty good guess. Furthermore, you'll need to input your estimated return on investment, which plays into the whole "growing your money" bit. If you put that cash into conservative investments, you'll probably only get 4% or 5% a year out of them. But if you load up on stocks, you're likely to see 7% or 8% a year over time.

Finally, you'll need to input your marginal tax bracket, which is the amount of tax you pay on your highest dollars of earnings. If you're not sure where you stand tax-wise, you can look up that information here based on your income.

To illustrate the benefit of sacrificing a little fun today, imagine you're willing to forego a monthly $50 expense for 30 years. Assuming a 3% inflation rate, 8% return on savings, and 25% marginal tax bracket, you'll be sitting on an extra $66,000 by the time retirement rolls around.

Tempting as it may be to have fun with your money, if you don't prioritize retirement early on, you'll risk outliving your savings and struggling financially as a senior. That said, there's nothing wrong with having a little fun with your money today while saving the bulk of it for the future. After all, you work hard for that cash, and as long as your savings are healthy, you should feel free to spend some of that money on yourself.

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