The government creates tax benefits for two main types of retirement savings accounts: IRAs and Roth IRAs. And within those categories, there are multiple kinds of account types. But let’s explain the difference simply: an IRA is tax-deferred, meaning that you don’t pay income taxes on the contributions; you pay it when you make a withdrawal. A Roth IRA is the opposite, where you make contributions after tax and then never pay taxes again.Forget about the tax part for now though, because this is really about compound growth and the opportunity cost of your purchases now. We’re going to share some examples of how much money you could have based on different scenarios. Remember that we’re using simplifying assumptions like a constant growth rate of investments and ignoring capital gains taxes. The point is not to give a specific number but to show the massive impact of saving now and saving consistently. If you max out your 401K at 20,500 for 5 years when you're 25-30 and never put anything in again, then at age 65 you'll have $1.35M.  Your 102K investment turned into 1.35MIf you put in $5K a year for 20 years from 25 to 45, and never put in anything again, then at 65 you'll have $848K.  A similar 100K investment became 848K, but that's $498K less than if you had invested the same amount earlier in life.If you put in $2500 a year for 40 years from age 25-65, then you'll have $534K.  That's almost a million less than if you had put in the same amount of money earlier on.If you put in $2500 a year for 25 years from age 25-50, and then at age 50 decide to max it out at 20K a year for 15 years, at age 65 you would have only $1M (but in this scenario you put in $362K vs. my other 3 scenarios you put in only $100K)The lesson here is:  sacrifice and save earlier on in your life and it will pay offSo what is the one thing you need to do to plan for a traditional retirement? SAVE. RIGHT. NOW.  The more, the earlier, the better.  At the same time, it’s never too late to start. You may need to make some tradeoffs earlier on in life to do this, but we think the tradeoffs are worth it.  Examples of things you could sacrifice to be able to max it out earlier in life:Control your housing expenses.  It’s most people’s #1 expense category.  Don’t buy a house quite yet. Instead, consider having a roommate or other forms of house-hacking.  LIve with your parents for a year.Don’t buy a fancy new car.Here are a few additional tips related to retirement accounts:Make sure your 401K is invested versus just sitting in cash!  Make sure you’re maximizing your employer match.  Invest your 401K aggressively if you’re comfortable with this, especially if you’re young and don’t need it anytime soon.Try to avoid the target date funds.  They are less aggressively invested, and they have higher fees on them.  Top 3 Takeaways:You can easily reach a traditional retirement with your 401K if you save early, consistently, and at a reasonable level.Your purchase decisions now impact you many times greater in the future because of compound growth.It takes time to build momentum, but trust us, saving now is the most important thing you can do.Show References:Friends on FIRE episode #18 - House HackingFriends on FIRE episode #016 -  401ks are your BFF!Friends on FIRE episode #114 | What’s a rothIRA and do I need one?---Follow friends on FIRETwitterInstagramFacebookLinkedInLeave us a voicemail or text us: 404-981-3370eMail us at:  friendsonfiremm@gmail.comVisit our website: www.friendsonfire.org---Other LinksMaggie’s Blog: Mostly Minimal LifeMike’s Book: Your New Relationship with Money