Most of the nation is ill-prepared for retirement, with many people’s budgets falling short of what’s needed. With life expectancy growing, it’s easy to spend the same amount of time in the workforce as out of it. So how should today’s youngest workforce know when might be the best time to start saving for future retirement?

Twentysomethings aren’t even thinking about retirement yet — it’s still more than 40 years away, so why sweat it now? They have student loan debt to contend with, and many haven’t yet purchased a car, not to mention a home.

For most young freelancers, the thought of saving for their golden years isn’t even on their radar. Staying afloat is their first and sometimes only priority in those first years of their career.

They don’t have an employer offering a 401(k), let alone a matching component. They’re typically focused on their lack of job security and how to make sure they’re going to earn enough money to get through the month. They’re left on their own to navigate paying income taxes and insurance while saving for their senior years.

With retirement so far off, twentysomething freelancers may think they can worry about it later. But the longer they put off saving for their sunset years, the harder it will be for them to adjust to that phase of their lives. Don’t think it’s important to start saving for retirement early and often? Think again. The best time to start saving for your retirement is much sooner than you think.

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Why Freelancers Need to Save for Retirement in Their Twenties

There are many good reasons to begin saving for retirement when you’re young, but these five are critical ones.

1. Take Advantage of Compounding Interest

Did you know that you could benefit from a tax credit if you began saving for retirement now? One of the most beneficial things about saving and investing early on is that you will have more money in the long run, thanks to compounding interest. With compounding, the initial amount of money you invest grows based on the interest that builds over time.

For instance, take a $1,000 investment with a five percent return. At the end of the first year, you’ll have $1,050. By the second year, your five percent return will be calculated on the $1,050 rather than the initial $1,000. The earlier you begin investing for your retirement, the more compounded interest you’ll reap by the time you’re ready to stop working.

Freelancers building a nest egg need to make sure their investments are in qualified retirement accounts, even if they don’t have an employer. Some of those include traditional or Roth individual retirement accounts, otherwise known as IRAs. These are the easiest to open and will enable individuals to contribute up to $18,500 in 2018, as the IRS states.

With a Roth IRA, your money — including your earnings — is tax-free once you start withdrawing it at age 59½. With a traditional IRA, contributions aren’t taxed, which lowers your taxable income, but you have to pay taxes on it when you start using it. If you expect to have more taxes when you retire, then a Roth IRA is the way to go. If you need to lower your taxes now, then a traditional IRA may make the most sense.

There’s also a solo 401(k) for those businesses that don’t have any employees. You get to contribute as both the employee and the employer, increasing the amount you can put in the retirement vehicle each year.

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2. It May Be Too Late If You Wait

The stock market has had a bull run that is now in its ninth year, following the Great Recession, which ushered in record foreclosures, high unemployment, and the near ruin of 401(k) and investment accounts.

While there currently isn’t any indication of the start of another recession, it’s not clear how much longer stocks will continue their march upward. After all, there are concerns that the Federal Reserve could raise interest rates more than expected and/or that President Donald Trump’s new tariff policies on imported steel and aluminum could spark a trade war, all of which would most likely sink stocks drastically.

As a result, now may be the best time to start saving for your retirement, even if you have more immediate expenses and spending categories that warrant your attention.

The opportunity to take advantage of a bull market isn’t going to last forever. Wait too long, and you may miss the boat.

Capitalizing on the market is easy to do nowadays, thanks to mobile apps and financial technology start-ups. There is a host of them that let you invest your spare change and place as little as $50 a month in an account that will then put the cash in exchange-traded funds (or ETFs). This gives you the chance to earn a return on your money, save for retirement, and not feel the pain. For the cost of two weeks of your daily cup of joe, you’ll be on your way to a decent retirement.

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3. No One Is Going to Do It for You

Employers want you to save for your golden years and will go to great lengths to get you and the rest of their workforce to do just that. Not only will they offer tax-advantaged retirement savings plans like a 401(k), but they will also provide a matching component as an incentive.

That match is often as much as 6 percent of the employee’s contributions, providing workers with free money that can grow over the years. Employers will also get the word out about their plans, offer open enrollment on a yearly basis, and send out reminders of key dates.

Freelancers don’t have any of that available to them. Because they are their own bosses, no one is offering them a retirement plan or providing a matching incentive. Nor is anyone encouraging them to sign up for a retirement savings plan. They need to take necessary steps from the get-go to successfully plan and save for retirement.

With all the freedom that self-employment provides comes a great amount of personal responsibility. If freelancers want to be successful in the long term, it will take smart steps that involve planning for the times they might not be working much, have as many clients, or aren’t making as much money as they want to.

Saving for retirement is one of the necessary steps that today’s freelancers often forget to take into account when setting out on their own. 

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4. Social Security May Not Always Be Around

People who are retiring now will get Social Security benefits, which means they’ll receive a monthly paycheck that can go a long way toward supplementing retirement income. But for twentysomethings who won’t be retiring for another 40 or so years, Social Security benefits won’t be the same as they are today.

Studies show that the institution behind Social Security is on the verge of collapse because of bad governmental decisions and borrowing from the fund paired with the sudden increase in retirees that is now occurring in the United States.

Although it’s hard to tell what the future holds in store, young freelancers today should save for their retirement themselves, as it seems that the institutions that help retirees may not exist by the time they’re ready to stop working and begin relaxing.

5. You’ll Never Get to Retire

One of the payoffs of working for decades is being able to trade in the commute for the golf clubs and living out your golden years in comfort and style. But with life expectancy stretching into the mid-70s, that won’t be feasible without retirement savings.

According to Fidelity Investments, in 2017 the cost of health care for a 65-year-old couple is $275,000 on average through retirement. Without any money in the bank, they would have to keep working well into their 70s — if not their 80s — and hope that they remain healthy.

Today’s freelancers often prioritize their immediate needs and strive for enjoyment in the here and now. However, they need to take into account the fact that their priorities will probably change as they grow older. Ensuring that they have sufficient funds to allow them to quit working and cover the cost of a nursing home out of pocket might just be one such yet-unanticipated eventuality to take into account.

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Final Thoughts on Saving for Retirement

Putting away money for something that is 40 years away may be hard to do for younger workers, but it’s a necessity. Without money in the coffers, you won’t be able to live the retirement you will someday envision.

For freelancers who don’t have an employer offering a tax advantage to automatically save for their golden years, it’s even more important. The earlier you start saving for retirement, the more money you’ll have to maintain your lifestyle when you are no longer working.

With Roth IRAs, smart investing, and the tax benefits of saving for retirement available to you, why aren’t you saving yet?

Ericka Paul is a CPA who has many young clients. After noticing patterns of unhealthy or risky financial behavior among today’s young workers, she’s decided to devote some of her time to educating them about smart savings and the importance of putting money toward retirement without delay.