Written by Jay MacDonald

Being young and financially irresponsible is great fun, but being old and broke stinks.

Still, that doesn’t mean you have to become a shut-in and put every spare cent into your retirement plan. Tuck away a little bit on a regular basis and you can party when you’re 19 and 99.

The turbulent 20s, that sometimes pleasurable, often painful transition from carefree adolescence to responsible adulthood, is admittedly a difficult time for anyone to focus on saving for retirement.

“It’s tough to start talking too many numbers with young people because a lot of times they’re also overwhelmed — it’s their first job, their first real paycheck, their first apartment, their first time dealing with health insurance,” says Derek Avdul, financial consultant and author of “Real Life 101: The Workbook.”

“When you have all these variables going on and they’re trying to be grown-ups, retirement just takes a back burner for a lot of them.”

Small sacrifices
Saving a little bit each month from the time you are young doesn’t require great sacrifice, yet it can make the difference between prosperity and poverty in the second half of your life.

Put retirement front and center

1. Cut the financial umbilical cord
2. Make affordable sacrifices
3. Women: Pay close attention
4. Make it, but don’t take it
5. Don’t pass up free-money 401(k) plans
6. Live within your means

The reason their parents’ generation continues to harp on it, with the best of intentions of course, is that many of them wish they’d started saving earlier, when they could have made smaller sacrifices and let compound interest do the heavy lifting. Compound interest, you may recall, is interest that is calculated on the initial principal and the accumulated interest of prior periods.

But that sage advice, as sound as it is timeless, still mostly falls on deaf ears.

“You can’t talk to them about 30 years from now and how compound interest is going to benefit them, because, as we all know, at that age you know a lot more than anybody older than you and you’re not going to need retirement money because you’re going to make it big on your own,” Avdul says.

Cut the financial umbilical cord
Unrealistic money expectations are rampant among young people today, according to author Nicholas Aretakis, who interviewed hundreds of 20-somethings coast to coast for his tough-talking survival guide, “No More Ramen.”

“Why don’t they save? The short version is, they never had to do it before. Their parents, the baby boomers and just after, have done so well economically that they’ve never had to have a budget before,” he says.

“The problem is, when they’re living at home, they take for granted that room and board is free, transportation is relatively free, most of their expenses are gratis on the parents, so they’ve got that financial umbilical cord. When they do break out on their own, they find out that everything has an associated cost. It’s a really tough concept for them that they just got done with college and they already have to save for retirement, so some of them are frozen in time and they just don’t start saving,” Aretakis says.

Make affordable sacrifices
Peg Downey, a fee-only Certified Financial Planner and partner in Money Plans, of Silver Spring, Md., says it only takes a small lifestyle adjustment early on, not a major commitment, to get this saving party started.

“If they just saved what they spend everyday at Starbucks, they would have a million dollars right there when they retired,” she says. “It’s phenomenal.”

Maybe not a million — but a half million, easy. Why quit the daily stop at Starbucks? You can brew that good stuff at home much more cheaply.

Let’s say that, beginning at age 25, you put the equivalent of seven $4 grande lattes a week toward retirement, setting aside $121 a month. If you invest it in a stock mutual fund with annualized returns of 9 percent, you would see $23,415 after 10 years, $80,814 after 20 years, $221,520 after 30 years and a whopping half-mil, or $566,440, when you retire at age 65.

Similarly, you can add even more to your retirement funds if you routinely set aside the price of small purchases.

Small trade-offs to make for future security:

• A couple of movie dates a month.
• An occasional manicure or tanning session.
• Music CDs.
• A couple of appletinis a week.

  Women: Pay close attention
  Of course, historically, investing in a stock fund that mimics an index such as the Standard & Poor’s 500 has offered returns of 10 percent, but there is no guarantee that it will continue to do so in the future. Nevertheless, young folks are in the best position to weather the storms of volatile markets because they have more time to recoup losses.

  Downey says young women in particular need to start socking away the latte cash sooner rather than later.

  “They’re going to live longer, they’re going to earn less, and they may need to fund their own retirement,” she says. “The way that jobs work now, you don’t stay at one job more than a couple of years, so nobody is going to be building up any kind of pension, even if there was one.”

  Make it, but don’t take it
  The easiest way to make affordable sacrifices on a regular basis? Take the money out of your paycheck before it hits your hand.

  “Get them to open up a savings account and, even if it’s $20 a paycheck, just siphon that off so that it automatically goes in there,” says Avdul.

  “The first goal is to get them to take it out so they don’t have to think about it.”

  Downey agrees: “It’s rare that people actually think to have money taken out of their check automatically every month; it can go into a money market account or a mutual fund.

  “When I say that, people are just amazed. You never see it so you won’t spend it.”

  Don’t pass up free-money 401(k) plans
  Employer-match 401(k) plans work well that way for many. Although some young workers bristle at tying up their money for so long, an employer match is one of life’s rare free-money opportunities that are too good to pass up.

  “So many people tell me, ‘I can’t afford the 401(k), I’ll do that in a couple years when I’m settled,'” says Aretakis. “You can’t afford to wait.”

  Say your company will match 50 percent of your contributions, up to 6 percent of your salary. And let’s imagine you earn $40,000. If you agree to contribute 6 percent, or $2,400, your company would add another $1,200 to the pot. That’s a 50 percent return on your money without even putting it into a risky stock fund.

  On top of that, you’re putting away money on a pretax basis, which lowers your income base when it comes to paying the tax piper.

  “If you’re getting taxed maybe 25 percent state and federal, you just made 25 percent on your money, plus whatever cumulative interest you’re going to make on top of that every year by putting it into a diversified account. You can’t get any better return than that,” says Aretakis.

  Of course, you will have to pay taxes on that money eventually, but in the meantime it can grow unfettered by taxes.

  Live within your means
  To find the scratch to sock away, Aretakis offers some suggestions.

  Ways to increase income or lower expenses:
  

• Get a roommate.
• Work a second job.
• Drive a fuel-efficient, secondhand car.
• Use an online telephone service like Skype or Vonage to lower communications costs.
• Cook in rather than eat out.
• Ditch credit cards and use cash.

  Above all, strive to live within your means — not some Hollywood fantasy.

  “Put together a budget and live beneath that budget,” Aretakis advises. Open up a brokerage account and start socking money away, he adds.

  “Every young person is going to want to present themselves well, drive a fancy car, but it’s just not pragmatic in the early days. You have to be a lot more sensible, with the escalation of tuition and housing costs. If you don’t pattern yourself well early on, you’re just going to set yourself back.

  “You can’t be keeping up with the Joneses.”