Here's What the Youngest Members of the Workforce Today Have Saved in Their 401(k)s

When you're in your late teens or early 20s and are first staring to work, it's natural to focus on your immediate needs -- things like making rent, covering your car payments, and tackling your student loans. If you're lucky, you'll have money left over in your paychecks to add to your savings.

It's important to focus on building an emergency fund early on in your working years. That way, if you wind up out of work or faced with a surprise expense, you won't necessarily have to turn to a loan or credit card.

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But it's also a good idea to fund a retirement account to the best of your ability when you're new to the workforce, despite it being a tough thing to do. And recently published Vanguard data finds that younger savers are doing surprisingly well when it comes to their 401(k) plans.

What the typical younger worker has saved in a 401(k) today

Each year, Vanguard compiles data on 401(k) savings trends. In its most recent report, it found that workers under age 25 had an average 401(k) savings balance of $6,899 and a median 401(k) balance of $1,948.

Now when you have this type of discrepancy between an average and median, it tends to indicate that the median is the more representative number. Put another way, more younger workers probably have a 401(k) balance of $1,948 than $6,899.

But still, the fact that workers under 25 have a notable amount of money in their 401(k)s at all is impressive. It's not easy to find money for a retirement account when you're that young. And anyone under 25 with any amount saved for their senior years is off to a strong start.

Fund that retirement account as early as possible

The reason it pays to save for retirement when you're very young is simple. The more time you give your money to grow, the more you can benefit from compounded returns.

Let's imagine you start putting $200 a month into a 401(k) at age 22, and you continue to do so through age 67, which is Social Security's full retirement age for anyone born in 1960 or later. Let's also imagine your 401(k) gives you an 8% annual return, which is a bit below the stock market's average. At the end of that window, you could be looking at a 401(k) balance of over $927,000.

To get to that balance, though, you're only putting in $108,000 of your own money. The rest is gains over that 45-year period.

Now, watch what happens when you start funding your 401(k) with $200 a month at age 32 instead. Assuming that same 8% return, you're looking at a balance of around $414,000.

In this case, you're contributing a total of $84,000 to your 401(k), which means you're still looking at a very nice gain. But it's not the same gain or balance you stand to retire with if you begin saving 10 years earlier.

Of course, a $200 monthly 401(k) contribution may be a stretch if you're in your late teens or early 20s and earning a pretty small paycheck. But try to save something each month in your 401(k) -- even if it's only $10 or $15. You can always start by contributing what seems like a minimal amount of money each month, but then increase that sum by $15 or $20 per month from that point on. Over time, you'll get to a larger monthly contribution without causing yourself too much stress.

And if you don't have access to a 401(k), worry not. Anyone with earned income can open an IRA and save for retirement that way. So even if you have a part-time job without benefits, getting a jump start on your retirement nest egg should still be an option.

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