The Rolling Stones probably weren't singing about retirement planning in their classic hit from the '60s, but there's no question that having time on your side is one of the most important keys to retirement planning success.
For example, consider Mike, a 30-year-old who just started making contributions to an IRA. If he contributes the maximum of $5,000 a year into his IRA every year until he reaches age 65, he'll have accumulated almost a million dollars for retirement, or $930,511 to be exact.
But look at what happens if Mike waits just five years and starts contributing $5,000 a year to an IRA when he's 35. In this case, he'll have only $611,729 at age 65.* So while he'll have contributed just $25,000 less, he'll end up with more than $300,000 less at retirement due to the loss of compounding returns on this $25,000 over 30- plus years.
*Example assumes an 8% annual return