The power of compound interest never ceases to amaze me.

I’ve read countless articles about how important it is to contribute to retirement funds beginning with day one of employment.  They say the funds will grow and grow, so the earlier you contribute, the better.  But I didn’t really get it until I recently took a look at my own retirement account statement.

When I was in graduate school I received a small stipend from my graduate assistantship as an academic advisor.  During those two years, a percentage was held out of my pay and went into the Ohio Public Employees Retirement System.  I remember being annoyed at the time because the $300 per year that was held out of my pay was a significant amount of money to me at that point.  But there was nothing I could do about it.

A few years later, when it became clear that my career was not going to be in the Ohio public university system, I rolled that small retirement fund into an IRA.  It was still a really small amount at that time.  Maybe $700…which is still larger than the $600 I had contributed.

Now fast forward 20 years to 2015.  That IRA that I started with just a few hundred dollars is currently worth over $3,600.  I never contributed another dime to that account.  Just the initial $600.  But it has grown to six times its original size.  And it still has many years to grow before I retire.  This is the power of compound interest.

When you leave law school and venture into full time employment, you should start saving for retirement as soon as possible.  It may seem like a better choice to wait until you’ve made a dent in your student loan obligations.  But it’s not.  The earlier you start saving for retirement, the more time your money will have to grow.  Contribute early.  Contribute often.  Retirement savings is never something that should wait until later.