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You could be 'literally costing yourself tens of thousands of dollars,' retirement expert says: Here's how

"Every year that goes by, you're literally costing yourself tens of thousands of dollars in the future."

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Just over half of American workers, 52%, said their savings for their golden years aren't where they want them to be, according to a recent survey from Bankrate.

That's not terribly surprising: As of the third quarter of 2021, the average 401(k) balance stands at $126,100, according to Fidelity's most recent report, and the average IRA balance is $135,700. Meanwhile, the typical saver's retirement goal is $1.9 million, a recent Charles Schwab survey found.

A common, perennial regret among investors is that they didn't start early enough.

That can be an expensive miss. The sooner you start saving for retirement, the more time your investments have the potential to grow thanks to compounding. Over decades, your compounded savings can add up to a lot of money, says James Royal, senior reporter at Bankrate.

"Every year that goes by, you're literally costing yourself tens of thousands of dollars in the future that you otherwise could have had," he says. "It's almost impossible to overstate the value of time."

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If you want to get on track for retirement, the time to get started is now. Here's how.

'Get your free 401(k) money first'

The first place to start is with your employer, if you have one, Royal says. About two-thirds of private industry workers had access to an employer-provided retirement plan in 2020, according to the Bureau of Labor Statistics.

Workplace plans often make it easy to get started, with contributions coming automatically out of your paycheck.

The real beauty of employer-sponsored plans such as a 401(k), Royal says, is the potential for free money: Many employers will match contributions you make to your retirement account up to a certain threshold.

For example, the average company contribution to employee 401(k) plans in 2020 was 4% of workers' annual pay, according to the most recent survey from the Plan Sponsor Council of America.

"So you put in 4%, they put in 4%, and suddenly you've got 8%," Royal says. "And that's why experts routinely say, 'Get your free 401(k) money first.'"

You don't need an employer-sponsored plan to invest for retirement

If your employer doesn't offer a retirement plan through work, or you want another place to save for retirement, you can open an account on your own. One easy option: an individual retirement account, or IRA.

Setting up an IRA is easy, says Janet Stanzak, a certified financial planner and founder of Financial Empowerment in Minnesota. Lots of companies offer them, so do some research and find which custodian works best for your needs. 

"You can open the account online," she says. "You don't even have to talk to anyone."

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The most important thing is to get started, because the sooner you start, the more time your money has to grow, Royal says.

"I can't really emphasize this enough: Time is your biggest ally," he says. "The longer you've got to let your money work, the better off you're going to be."

Investing involves risk, including the loss of principal. Please consider, among other important factors, your investment objectives, risk tolerance, and fees before investing.

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