If you want to retire rich, start saving investing early. The most powerful tool when it comes to retiring rich, is compounding your returns on money saved when you are young. Through the power of compound interest, cash invested today has a massive impact on your wealth level when you retire.

Look at it this way, assuming a retirement age of 65 and an annual compounded rate of return of 10%.

* Bob is 40 years old and invests $20,000 a year for retirement.

* Jenny is 21 years old and invests $5,000 a year for retirement.

By the time they retire, Bob will have invested $400,000 and Jenny $220,000 respectively. But because of the power of compound interest, Bob will retire with half as much money as Jenny, despite investing twice as much!

* Bob would retire with $1.97 million

* Jenny would with $3.26 million

So, what's the moral of the story?

Stop robbing your future retirement income to pay for luxuries today.

Maximize your annual contribution to your IRA

When it comes to your IRA contribution limits, Uncle Sam's motto seems to be "use it or lose it". Workers that don't make the maximum allowable contribution to their Traditional or Roth IRA by the cut-off date, are plain out of luck unless they are in their mid-fifties and qualify for catch-up contributions.

Take advantage of your employer matching funds

Many companies will match up to fifty-percent of the contributions employees make to their 401k and other retirement accounts. If your boss will match your contributions, take full advantage of it, as it is money for nothing... literally free money!

Don't take your retirement cash out when you change jobs

The average American worker will change jobs several times in their career. When this occurs, the most foolish thing you could possibly do is to cash out of your retirement plan. What you should do is roll over the proceeds into an IRA or your new employer's 401k plan. Besides avoiding significant tax penalties, you will be able to keep your money working for you tax-free.

Avoid IRA withdrawal fees

There are numerous ways to withdraw money from your retirement account in the event of an emergency. However, before you even think about doing so, make absolutely certain that you have done everything required to qualify, otherwise, you will get a quite a shock when you are hit with what could be thousands of dollars in fees and penalties.

Expand the Pie

Don't just cut expenses - find a way to make more money! Get part-time work, or turn your hobby into a business enterprise. You should create additional streams of income to help fund your retirement. Often this is an excellent alternative to cutting costs and scrimping, because it allows you to maintain your current standard of living, while providing for your future retirement.

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Russell Savige is the owner of DX Currency Trades a website detailing investment plans, online currency trading and building personal wealth.
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