The First Thing You Should Do in 2015

Source: 2015 New Year celebration by christmasstockimages.com.

2015 is here, and with the markets having closed for New Year's Day, you've had a day to relax and recover from late-night celebrations on New Year's Eve. But with that behind you, there's one thing you can do right away to make sure you get 2015 off to the best start possible: boost your retirement savings by making an early contribution to a traditional or Roth IRA.

For several years now, I've encouraged investors not to wait any longer than necessary to get money into tax-deferred retirement accounts. With six straight years of bull markets under investors' belts, those who have followed that advice have benefited handsomely from their discipline. Even if you haven't been thinking about your retirement savings much in the past, though, it's not too late to make the smart move of catching up on your IRA contributions in 2015.

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The cost of waiting
For many investors, one of the biggest benefits of IRAs is that they offer the option to do tax planning even after the tax year has ended. Now that January is here, it's too late to do a lot of things to reduce your 2014 tax liability. However, the IRS gives you until the April 15 filing deadline to make IRA contributions for the 2014 tax year, leaving you several extra months to come up with the money you need to fund a retirement account.

Yet the flexibility of being able to make IRA contributions close to the filing deadline can create bad habits that can cost you thousands of dollars in lost investing profits. Often, a year can make a huge difference in how much your investments will grow over the course of a lifetime. Consider, for instance, how much your IRA would be worth now if you had invested the maximum contribution of $5,500 in any of these high-performing stocks at the beginning of 2014.

Source: Yahoo! Finance.

As you can see, if you passed on the opportunity to invest in one of these five stocks a year ago, it cost you anywhere from $3,500 to $9,200 in lost profits. And while these examples are clearly extreme, even the S&P 500's double-digit percentage gains in 2014 cost those who waited until now to make 2014 IRA contributions substantial gains on their money.

Heads you win, tails you win
Of course, the obvious rebuttal is that there's no guarantee that 2015 will be a winning year for the stock market. After all, after six straight years of gains, it's easy to conclude that the market is overdue for a lousy year. And with the Federal Reserve poised to start raising rates, some analysts agree that the punch bowl might disappear sometime during 2015.

Source: JDACommunity.com.

Yet the beauty of IRA contributions is that you can undo them at any point until the due date of your return. So, if you make a 2015 IRA contribution today, you have until April 2016 -- or October 2016 if you file for an extension -- to pull out your money without penalty. That can be a smart move if you've lost money on your investments and can time the withdrawal correctly, as it opens the door to making a later recontribution and getting a full $5,500 back into your retirement account despite losses.

Opening an IRA is easy to do, and with so much to gain and so little to lose, it doesn't make sense to wait any longer than you have to. Even if you can't afford to get the full $5,500 into an IRA this early in the year, making the effort to get your 2015 IRA contributions made as soon as you can could make a huge difference in your total return this year -- and could greatly boost the money you have available once you reach retirement.