When's the best time to plan for retirement?

Somebody recently asked me whether it's worth their while to even bother to think of retirement in their twenties. After all serious adult preoccupations such as financial planning and retirement are for people in their 40s when there is something to plan for. The truth is that it's never too late to plan for the future as this striking example will illustrate:

Scenario 1:
Joe a 19 year old socks away $2,000 a year into a retirement account for 8 years

Scenario 2:
Jill a 26 year old diligently invests $2,000 a year from age 26 to age 65. That's 39 years of investing!

Assuming that both Joe and Jill earn a 10% return per year who do you think comes out ahead at age 65?

Age	Joe 19		Jill 26
	Savings	Year end balance	Savings	Year end balance
19	$ 2,000	$ 2,200		$ -
20	$ 2,000	$ 4,620		$ -
21	$ 2,000	$ 7,282		$ -
22	$ 2,000	$ 10,210		$ -
23	$ 2,000	$ 13,431		$ -
24	$ 2,000	$ 16,974		$ -
25	$ 2,000	$ 20,872		$ -
26	$ 2,000	$ 25,159		$ -
27		$ 27,675	$ 2,000	$ 2,200
28		$ 30,442	$ 2,000	$ 4,620
29		$ 33,487	$ 2,000	$ 7,282
30		$ 36,835	$ 2,000	$ 10,210
31		$ 40,519	$ 2,000	$ 13,431
32		$ 44,571	$ 2,000	$ 16,974
33		$ 49,028	$ 2,000	$ 20,872
34		$ 53,930	$ 2,000	$ 25,159
35		$ 59,323	$ 2,000	$ 29,875
36		$ 65,256	$ 2,000	$ 35,062
37		$ 71,781	$ 2,000	$ 40,769
38		$ 78,960	$ 2,000	$ 47,045
39		$ 86,856	$ 2,000	$ 53,950
40		$ 95,541	$ 2,000	$ 61,545
41		$ 105,095	$ 2,000	$ 69,899
42		$ 115,605	$ 2,000	$ 79,089
43		$ 127,165	$ 2,000	$ 89,198
44		$ 139,882	$ 2,000	$100,318
45		$ 153,870	$ 2,000	$112,550
46		$ 169,257	$ 2,000	$126,005
47		$ 186,183	$ 2,000	$140,805
48		$ 204,801	$ 2,000	$157,086
49		$ 225,281	$ 2,000	$174,995
50		$ 247,809	$ 2,000	$194,694
51		$ 272,590	$ 2,000	$216,364
52		$ 299,849	$ 2,000	$240,200
53		$ 329,834	$ 2,000	$266,420
54		$ 362,817	$ 2,000	$295,262
55		$ 399,099	$ 2,000	$326,988
56		$ 439,009	$ 2,000	$361,887
57		$ 482,910	$ 2,000	$400,276
58		$ 531,201	$ 2,000	$442,503
59		$ 584,321	$ 2,000	$488,953
60		$ 642,753	$ 2,000	$540,049
61		$ 707,028	$ 2,000	$596,254
62		$ 777,731	$ 2,000	$658,079
63		$ 855,504	$ 2,000	$726,087
64		$ 941,054	$ 2,000	$800,896
65		$ 1,035,160	$ 2,000	$883,185

Surprisingly enough Joe, who started early and even though he only paid in for 8 years is better off to the tune of close to $200,000. He's 20% better off due to the power of compounding!