Your 401(k) begins with your first paycheck

When is the right time to start thinking about retirement savings? When you get your first paycheck. The compounding interest combined with matching funds in a 401(k) from your employer and you could be sitting on real cash.

The reason, though, that folks wait to start saving is that they say they don't have enough money.  Let me tell ya story. In my first news job I made - as a full-time employee - $12,500. A year. Granted, it was a long time ago, but it was considered really low even then. I nearly starved to death. My company offered a 401(k), and my mom truly forced me to contribute. And thank goodness she did.

Let me show you something. Let's say you start investing at the age of 35. That's still young. You put $5,000 into your 401(k) at eight percent interest. And you do that until age 60. That's $130,000 you've invested with an ultimate savings of more than $431,000.

STARTING 401(k) AT 35
$5,000 annually
Invest from 35-60
Total investment $130,000
SAVINGS $431,754

Now let's start earlier at 25 and only save for 10 years quitting at 35. Look at the difference. You're putting $55,000 of your own money in there rather than $130,000 and you're getting a whopping $615,580. That's a nearly $200,000 difference.

STARTING 401(k) AT 25
Invest 25-35
Total investment $55,000
SAVINGS: $615,580

That's compounding interest - something Albert Einstein called the eighth wonder of the world.  Now many 401(k) plans come with matching contributions from your company. Here's how you maximize that. Let's say they offer 50 cents for every dollar up to six percent of your salary. Contribute up to the six percent so that you can get free money. Yes, free money.

401(k) not an option? Try a traditional or ROTH IRA.

A traditional IRA works much like a 401(k). Your contributions are tax-free. You are dinged by the IRS in your retirement. With the ROTH IRA there's no front-end tax break, but your withdrawals are tax-free in your retirement years.

Whatever you use, just get started.