The sooner you begin saving, the more you can benefit from tax-deferred compounding. Even small amounts of money set aside today can potentially grow over time into a significant amount for your future needs. For example, let's look at Amy and Greg who are the same age. Amy starts saving $2,000 annually for her retirement at age 30 and makes contributions for six years. Greg also saves $2,000 annually but waits until age 40, making contributions for the next 25 years. Both individuals earn 8% annually on their investments. Even though Greg actually puts more money into the plan he struggles to come close to Amy's earning power.