Why now is the time to start retirement planning

When you haven't already started, retirement planning can seem all but impossible. If you don't think you can do it, this article is for you.

It's easy to tell yourself that retirement planning can wait until you're in a better place financially. But waiting could mean missing the chance to get the most out of your retirement savings. Here are three reasons you might be putting off saving for retirement and why you should start now.

1. There's no better time to start than now

The earlier you start saving for retirement, the better. That's because a retirement account works best over a long period of time, thanks to what's called compound interest, where you earn interest on your interest, as well as on whatever money you actually put toward retirement.

Confused? No worries. Here's what that really means.

Imagine you have an account that compounds interest each year. The first year you put money into the account, you'll earn a small fraction of that amount as interest. The next year, and every year after that, you'll earn interest on whatever money you've saved in the account, including the interest you've already earned. This means that the sooner you start contributing, the bigger and faster your money can grow.

Say you just turned 30, and you've decided to start saving $100 a month in a retirement account with 4 percent compound interest. Your friend does the same, except she waits until she's 40. By the time you're both 65, your balance will be $91,677 while hers will be $51,584.

Now, this is partly because you contributed more money than her ($12,000 more, to be exact) before she ever touched her account. Even if you add $12,000 to her balance, though, she'll have only $63,584 — $28,093 less than you. That $28,093 is the compound interest you earned from your 10-year head start, and that's the result of contributing just $1,200 a year!

The bottom line? Whether you're in your 20s, 30s, or 40s, start planning for retirement now.

2. Find retirement savings hiding in your spending (or in your closet!)

When you're in your 20s, the only thing tighter than your budget is the counter space in your shoebox studio apartment. In your 30s, you may be juggling mortgage payments and daycare costs. And by your 40s, your kids' post-secondary education costs are looming just beyond the horizon.

How can you afford to carve anything out for retirement savings? It's easy to tell yourself, "Maybe later, when I have some breathing room," but it's important to make contributing a habit as soon as you can, not something you tell yourself you'll do if a sudden windfall comes. Remember: compound interest means that even a small amount of money can really grow over the years.

"The bottom line? Whether you're in your 20s, 30s, or 40s, start planning for retirement now."

Don't be afraid to get creative. Sell anything covered in dust, turn your secret talent into a side gig, or download a couponing app. Even if it's just a few dollars here and there, put that money into your retirement fund. When you get a raise or come into some money, don't go on a shopping spree. Instead, put it toward your retirement.

No matter how old you are, planning for retirement means making choices now that will reward you later. It's OK to start small, just as long as you start. That's what matters most.

3. Retirement planning now lets you save for your ideal retirement lifestyle

Retirement may seem so far into the future that it's unreal. Could you even say what your life will look like five years from now, let alone four decades down the road?

Try picturing your ideal retirement. Do you want to be living where you are now? Travelling the world? Do you want to be showering your grandkids with gifts? Polishing your classic car collection?

To help make your retirement goals a reality, imagine the life you want to live when you stop working, and be as specific as possible. What do you need to start saving today to get there? Call this picture to mind every time you have second thoughts about where your dollars should go.

Once you get your retirement savings started, you won't be able to remember what you were so afraid of. So give these three excuses a run for their money and take the first step today.