Sometimes people feel like it's too late to fund retirement — like they've missed the retirement boat and so they may as well not bother at this point. But there's an old saying that goes, “The best time to plant an oak tree was twenty years ago. The second best time is now.”
The same thing is true for retirement.
If you're in your twenties and just starting out, realize that you have the best shot at painlessly funding retirement NOW — because this IS your twenty years ago. Even small amounts put away regularly at that age will add up to ENORMOUS amounts when you're ready to retire. For example, if you have an IRA that you add $1000 to per year starting at age 20, by the time you retire at 65 you'll have over $400,000 in your account (assuming an 8% rate of return). That's only about $83 per month to end up with over $400,000. You could spend more than that on a couple of nice dinners out. Up your IRA contributions to the current max of $5000 per year, and you'd have over $2 million in the account at that same rate. Of course you can contribute more than the $5000 too if you're eligible for a 401(k) plan or other plans.
But all is not lost even if you're long past your twenties. It's not too late. That's the thing to keep in mind. Yes, you'll have less time before retirement, but chances are you'll also have a much larger income than the typical 20 year old would. If you are over age 50, you'll also be able to make catch-up contributions. This increases the amount that you're allowed to contribute to IRA & 401(k) plans. You can always beef up your investments in non-retirement accounts as well. (There's no rule that a retirement account has to be labeled as such to be used for retirement, although you'd want to take advantage of all the tax-advantaged methods of saving for retirement first.)
I know that I personally feel like I'm behind on retirement, so I'm really playing catch-up now. I did begin contributing in my twenties, but then stopped almost immediately. Then I had to cut my retirement account in half during my early thirties (due to divorce). I've since resumed making contributions, and am working on making up for lost time. After all, what's my alternative? Just throwing up my hands and saying oh well, I didn't save enough before so why start now? That's a guaranteed way to end up with nothing. I prefer to have something. As large a something as possible.
The key thing is to start now if you haven't already, no matter when “now” is in your life. Get that oak tree planted.