Young and foolish about money pinThe last thing many of us are ready to think about when we’re in our twenties is retirement planning.

We are busy growing our careers, juggling monthly payments, paying off student loans and other debts, and in our spare time we’re probably searching for that special someone to grow old with.

What twenty-year-old has time for retirement planning?

Don’t Ignore Retirement Savings in Your 20s

My first job out of college offered a 401k with employer matching, but I did not take advantage of it.

I was struggling to keep my head above water, pay my rent, get along with my roommates, and still have fun with my friends. Retirement was so far away it didn’t seem relevant to my life, which is a misconception that keeps many of us from taking advantage of our ideal circumstances.

The reality is that as a twentysomething, even though you probably are short on cash, what you do have available to invest in your future, in fact, is time.

Though retirement planning is often overlooked when you’re in your twenties, it is by far the best time to start building a portfolio that you can spend the rest of your life with.

I eventually landed a job with the federal government. In college, I knew that I wanted to go into a career working for the federal government because it is work that I enjoy. It’s fulfilling to be of service to my country, not to mention that it offers quite a bit of stability as well as a pension plan. Retirement finally seemed like a tangible goal.

Taking Advantage of Retirement Saving Tools

Even though I planned to make government service my career knowing I could get a pension when I retired after 40 years of service, my parents encouraged me to save in my Thrift Savings Plan (or TSP, similar to a 401k). The government will automatically put 1% of my salary aside into my TSP account. They will also match dollar-for-dollar the first 3% of my salary that I put aside into my TSP, and then they match the next 2% at $.50 for each dollar.

Since I am still broke, I signed up for just 3% of my salary to be deposited into my TSP savings and the government matched that plus 1% of my salary in agency automatic contributions.

In other words, I’m getting an additional 4% of my salary in free money as long as I am contributing!

The great thing about employer-sponsored TSP or 401k plans is that they will often offer some matching funds to encourage their employees to participate (again, free money!) and the money comes right out of your paycheck so you don’t even miss it.

Watch Retirement Funds Grow

I started saving at 25. Almost five years later, I have saved $16,000 in my TSP account.

With compound interest, I’ll have a lot more money saved up by the time I retire.

According to GoGirl finance expert, Manisha Thakor, “The reason you invest is to protect your purchasing power from the ravages of inflation.”

Check out the chart on The Secret to Saving More to see how much you can save thanks to the power of compound interest.

This is why it’s so important to start saving early.

It can be easy to overlook retirement planning in your 20s because you have so many other things going on, but early in your career is when you have the most time on your side.

Even without a lot of money to invest, taking advantage of your employer matching funds and letting compound interest work its magic can result in major savings for you down the road.

For more information, check out The GoGirl Guide to Saving and Investing for Retirement.