Twenty-six percent (26) of investors in the United States began saving for their retirement before reaching the age of 25 years old, according to the latest study from Wells Fargo/Gallup Investor and Retirement Optimism Index.

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Snowball savings

The study showed that 7% of investors started saving for retirement when they were younger than 20 years old while 19% began saving at the age when they were between 20-24 years old. On an average, investors started their retirement savings at the age of 29 based on the study.

Those who started saving for their retirement at an early age, around the age of 20s are poised to enjoy remarkable gains due to the effect of compound interest in long-term savings, which is also referred to as “snowball savings.”

According to the study, 28% of all investors said they first made their savings for their retirement sometime in their 30s—a significant percentage of people that may have missed the prime years for them to maximize the effect snowball savings.

The percentage of investors who started saving for retirement at their 40s were 14% and those when they in their 50s or older were only 8%.

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Most investors believe they could save more for retirement

A majority of non-retired investors (69%) believed that they could save more for their retirement. The average estimated additional savings among this group of investors is about $250 per month.

When asked if they would save more for their retirement under a hypothetical scenario that they would not receive any money from Social Security; 30 % of the investors replied that they would be motivated to save a lot more. Twenty four percent (24%) said they would save a little more while 44% said the situation would not make difference.

Based on the response of the investors, many of them are still relying on Social Security as source of money during their retirement. The study suggested that in reality many non-retired investors could probably be saving more by practicing careful budgeting. A previous study indicated that 38% of non-retired investors expressed concerned that they are not saving enough for retirement.

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The Gallup Poll senior editor Lydia Saad opined that every American worker could start saving for retirement during his or her early 20s, use tax-advantaged accounts to shelter at least 10% of income and earn interest that beats inflation.

“By this point in the holiday season, spare cash can be hard to come by, but for those who have a little extra and do not yet have a retirement account, learning about compound interest could provide them the motivation to start saving. And for those investors who believe they can squeeze out more savings each month, now is the time to increase their 401(k) contributions for next year or make a catch-up contribution for 2014 if eligible,” wrote Saad.

The results of the study were based on the questions asked to 1,009 adults in the United States with $10,000 or more investable assets.