In two words, "a lot." The early savings for retirement that you set aside in your 20s have the potential to earn four decades of compound interest. Here's an example that illustrates this with numbers. Let's say Investor No. 1 invests $2,000 a year for 10 years, beginning at age 25. The account earns 6% compounded monthly for 40 years until age 65. Investor No. 2 also invests $2,000 a year for 10 years but doesn't get started until age 35. The account earns 6% compounded monthly for 30 years until age 65. Investors No. 1 and No. 2 will accumulate $196,857 and $100,562, respectively, a difference of $96,295. The moral of the story is the earlier you start investing for retirement, the much larger your nest egg will be.
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