Here's What Happens When You Open a $1,000 IRA at Age 22

Many people spend their 20s paying off the debt they incurred in college and struggling to cover their bills on an entry-level wage. Saving money for near-term goals can be tough during that decade of life. And saving for far-off milestones, like retirement, can be even tougher.

Recent data from Northwestern Mutual finds that the average 20-something has $35,800 saved for retirement. So this tells us that saving for retirement in your 20s is possible, even though it may be difficult. And if you're able to push yourself to start saving for retirement in your early 20s, you might end up with a whopping pile of cash by the time you're ready to close out your career.

It pays to get started investing as early as possible

By age 22, many people are out of college and working full-time jobs. If you happen to land in that boat, one of the best moves you can make is to open an IRA and start making consistent contributions to that account. It doesn't have to be 10% or 15% of your paycheck, though. You probably can't swing that, which is both understandable and OK. Saving even $100 a month in your 20s could go a long way.

Let's say you begin funding an IRA at age 22 to the tune of $100, and you never manage to increase that monthly $100 contribution in your lifetime due to increasing expenses. Let's also assume you retire at age 67 and the investments in your IRA generate an average annual return of 10%, which is consistent with the stock market's average return over the past 50 years. In that case, you'll be looking at an IRA balance of about $863,000 going into retirement.

Northwestern Mutual, meanwhile, reports that the average retirement saver in their 60s has a nest egg balance of $112,500. So if you're able to retire with $863,000, you'll be way ahead of the typical new or near-retiree today.

It's also worth pointing out that saving $100 a month over 45 years means putting a total of $54,000 into your IRA. The reason you're able to turn that small sum into $863,000 is compounded returns.

When you invest your savings, you earn a return on that money every year. You can then reinvest that return so that over time, your wealth grows a lot. Remember, with an IRA, you receive more tax benefits than a regular brokerage account. So that makes it easier to grow wealth.

Push yourself to open and fund an IRA

Unlike 401(k) plans, which hinge on working for an employer that offers one, you can open an IRA on your own as long as you have earned income. So if you're new to full-time work, one of the smartest things you can do is open an IRA early on and set up an automatic monthly contribution to that account, even if it's just a small one. Committing to that early on could leave you wealthy by the time retirement rolls around.