Do You Really Need to Start Saving for Retirement in Your 20s?

If you don't, you might regret it.

The average senior on Social Security collects $1,827 a month. Chances are, that's a lot lower than your monthly pay right now.

It's important to save for retirement because Social Security will almost certainly not provide you with enough income to cover your bills and have enough money left over to actually enjoy your senior years. And the sooner you start funding an IRA account or 401(k) plan, the better. That means it's a great idea to start contributing to a savings plan as early as your 20s.

Now, you may be thinking, "Do I really need to start saving that early?" And the answer is, you technically don't have to. But you may want to, for one big reason.

You don't want to end up short

Many people spend their 20s trying to dig out of credit card debt and build up emergency savings. So it's easy to see why the idea of having to make retirement plan contributions might seem difficult or even unappealing.

But one thing you should know about building retirement savings is that the more time you give yourself, the easier it actually becomes. And on the flipside, if you don't give yourself a lengthy enough savings and investing window, you might end up disappointed in the nest egg you bring into retirement.

Let's assume you're able to carve out $200 a month for retirement savings. Let's also assume you invest your money in a manner that delivers an 8% average annual return. This return is a few percentage points below the stock market's average return, as measured by the S&P 500 index, so it's a reasonable one for a longer savings window.

Now, let's assume you start saving that $200 a month in your 20s so that all told, you end up with a 40-year savings window. That means you'll wind up with a nest egg worth almost $622,000. That's pretty impressive, right?

But watch what happens when you don't start socking that money away until your 30s. If you shrink your savings window from 40 years to 30 years, you'll end up with a nest egg worth about $272,000.

That's by no means a negligible amount of money. But would you rather retire with less than $300,000, or more than $600,000? The answer should be pretty obvious. And that's exactly why it pays to save for retirement in your 20s. A few extra years of contributions and investment gains could make a world of difference.

A good way to get into the habit of saving for retirement

If you're not used to funding a retirement plan, you might struggle to come up with the money month after month. So if you really want to be successful, put the process on autopilot.

With a 401(k) plan, your contributions actually are automated, because they're deducted from your paychecks. But many people write a check to their IRAs or transfer money each month, and that's a system that may not work for you. A better one may be to set up an automatic transfer from your checking account to your IRA so that money lands in your retirement plan at the start of the month -- before you've gotten a chance to spend it.

Many people don't start to save for retirement in their 20s. But if you start early, you're apt to be extremely thankful for it down the line.