What is the primary benefit of starting retirement savings early?

The primary benefit of starting retirement savings early is that it maximizes compound interest over time. When individuals begin saving for retirement at a younger age, they allow their investments to grow over a longer period. Compound interest works by earning interest not only on the initial principal but also on the accumulated interest from previous periods. This effect can lead to significantly larger savings as time passes, making a notable difference in the total amount saved by the time retirement is reached.

Starting early means even small contributions can grow into substantial sums due to this compounding effect. The longer the money is invested, the more opportunity it has to compound, which can result in a far greater financial cushion for retirement compared to starting savings later in life.