Anyone can save for their retirement if they start saving earl, pay attention to what they are investing in, and build equity through home ownership.

Start Investing As Young As Possible

The average post college worker will begin working at age 23, and probably wont retire until they are 65 years or older.  This gives the average person 42 or more years to achieve enough wealth to carry them through their retirement.  While 42 years is a very long time, few people in their early twenties realize the magnitude of investing early.  Thanks to compounding interest, investments made at a young age can amplify to a great amount.

If a 23 year-old begins saving for retirement by investing $2,500 their first year in the workforce, achieves an average return of 8%, and increases contributions 3% each year, they will have about $1.1 million saved by the time they are 65 years old.  If the same person waits until they are 33 years old, and assuming the same return and escalating contributions, they will need to invest $6,000 per year to reach the same goal.

Pay Attention to your Investments

The next rule of thumb for properly saving for retirement is to keep close attention to your investments.  Following the news and selecting investment funds which are doing well and are poised for higher future gains can have a significant impact on your future nest egg.

Even a small increase in return can add up big over time.  If the 23 year-old investor mentioned earlier achieves a 10% return as opposed to an 8% annual return, their nest egg will be $1.83 million, almost 67% larger.

Build Wealth by Purchasing Your Home

The final step in saving for retirement is buying a home.  While home prices have been proven to go up and down, long term wealth is best achieved by purchasing a home and paying off a mortgage as opposed to renting.  An added benefit of that is by the time you reach retirement, there is a good chance you will be mortgage free and more of what you saved for retirement can be spent on things you enjoy.