Just Got Your First Job? Here's What You Should Contribute Toward Retirement Savings

Getting your first job is an exciting milestone. And you should take pride in the fact that you're earning an income of your own.

But it's important to make the most of that paycheck. And part of that means setting money aside for retirement.

Now you might think that it's silly to start saving for retirement when you're in your early 20s and the end of your career is so many years away. And you might think that saving for retirement will be tricky if your first job isn't exactly a high-paying one.

The thing to remember about retirement savings, though, is that the more time you give yourself to do it, the more wealth you stand to build. So it's important to contribute funds toward retirement as soon as you're collecting a steady paycheck.

Now that said, building an emergency fund should actually trump retirement savings, the logic being that money in a regular savings account could spare you the cost of having to take on debt for unexpected expenses. But once you have a solid emergency fund, it's a good idea to sock away money each month for retirement -- even if that means not getting to spend as much on other things.

Aim for 15% of your earnings or more

Many financial experts will tell you that it's a good idea to sock away at least 15% of your income for retirement savings purposes. Dave Ramsey is one of them. But the reality is that the more you're able to set aside for retirement, the better.

Some people, in fact, sock away 50% of their income for retirement -- even when they're new to the workforce. If you can't swing that, it's understandable. But do try to aim for 15% of your paycheck, because that might set you up with a nice nest egg over time.

In fact, let's say your first job has you earning $60,000 a year. Saving 15% of that salary means parting with $9,000 a year, and that's not an easy thing.

But think about it this way. If you save $9,000 this year alone and don't retire for another 45, you'll grow that $9,000 into about $656,000 if your retirement plan delivers an average annual 10% return before inflation, which is consistent with the stock market's average, as measured by the S&P 500's performance.

It's best to put the process on autopilot

When you're new to managing a paycheck, it can be difficult to stay disciplined on the retirement savings front. A good way to stay on track is to automate your savings so your retirement plan contributions get taken out of your pay before you get a chance to spend your money.

If you have access to a 401(k) plan, your contributions will be deducted from your pay automatically. With an IRA, you'll need to set up an automatic transfer from your checking account.

It's also worth noting that you actually can't contribute $9,000 a year to an IRA. This year, the limit for IRA contributions is $6,500 for savers under age 50 and $7,500 for those 50 and over, though it could change over time. So in that case, what you'd probably want to do is max out your IRA and then invest your remaining retirement savings into a regular brokerage account.

Either way, though, it's important to prioritize retirement savings when you're new to the workforce. Doing so could really set you up nicely for your senior years.