Want to terrify yourself, carefree 20-something? Divide 1million by 40 the number of years until retirement and youll see a nice round 25,000. Thats how much, in dollars, youd need to save each year if you were stuffing money under a mattress to save your $1million retirement nest egg. Thankfully, this is not how you save for retirement.

The calculation of I need $1 million dollars by 65, so Ill divide by 40 ... is dramatically off, said Antwone Harris, a certified financial planner with Charles Schwab in the District. Its not accounting for compounding interest or rates of return.

But those compounding interest rates mean one complicated thing: You must invest your savings as soon as possible. Why? According to Ameriprise Financial, waiting even one year can have dramatic effects. If you invest $5,000 every year beginning at age 30 instead of 31, you will have $109,000 in additional savings, assuming an 8percent compounded annual interest rate.

So how much should you invest? What will you need for retirement? And how important is it to start investing every spare penny you make in your 20s? Too many factors go into the calculation to generalize (and theres not enough space here to explain a complex mathematical formula), so we used CNN Money and Charles Schwab Moneywise retirement calculators to get ballpark figures of what you should be saving. Read. Weep. Then invest.

If youre 25

How much will I need to invest each year for retirement?

Low figure: Its assumed that youll need 80 percent of your pre-retirement income when you retire at 65. Lets say you make $50,000 a year. If youre 25 and have no savings, CNN Money says you should be saving $4,550 annually, adjusted for 2.5percent inflation. (This calculator assumes you will be receiving Social Security benefits. More good news: Some experts do not think Social Security will exist in 40years.)

High figure: Charles Schwab MoneyWise Calculator offers a higher figure. If youre 25 and plan to retire at 65 with 80 percent of your pre-retirement income, and expect to receive Social Security benefits, you need to save $6,900 annually.

How much will I need for retirement? CNN Money assumes you will need $1.9million ($572,283 in todays dollars) to retire at 65 years old, with a life expectancy of 85. Charles Schwab estimates you will need $1.8 millionin future dollars.

What should I save each paycheck? If youre paid every two weeks, you should save $175 to $275 each pay period to meet the estimated goal.

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