Above all else, investing early is the best way to ensure your retirement savings are on track, Americans say.

That's according to CNBC's August 2024 Your Money retirement survey conducted with SurveyMonkey, which found that only 37% of non-retired Americans are either "on schedule" or "ahead of schedule" with their retirement investments.

Considering that more than half of Americans say they're behind on their retirement savings, it can feel impossible to get ahead. But of those who feel good about their savings, 42% cite contributions made early in life as the No. 1 factor for building up retirement wealth.

That's followed by low debt (38%), homeownership wealth (37%), good saving habits (35%), employer-sponsored retirement accounts (35%) and earning good income (32%), along with other less-cited reasons. Respondents were asked to choose all reasons that apply.

Here's a look at why investing early is so impactful, and how to get in the habit while you're young.

The power of compound interest

Recent research from Morningstar found that 79% of Americans who have at least 20 years of future participation in an employer-sponsored retirement plan, like a 401(k), will end up with enough savings to last throughout retirement.

It's perhaps not surprising that early contributions to retirement accounts puts people in a good spot financially, since they often provide the bulk of most people's wealth.

One that reason these investment accounts can be so powerful is because they grow with compound interest, a process where interest is continually earned on both the principal amount plus any accumulated interest, leading to exponential growth over time.

"It's the true secret to success in the stock market," says Marcus Holzberg, a certified financial planner in California.

DON'T MISS: How to master your money and grow your wealth

Holzberg uses the example of a 25-year-old who makes $100 monthly contributions to a retirement account that compounds monthly and earns a 5% rate of return. By age 65, the total would grow to approximately $152,000, he says.

However, if they waited until 35 to start investing, the total would shrink to about $83,000. Waiting until 40 reduces the amount further, to around $60,000 — nearly a third of the value compared with starting at 25.

Compounding interest can work against you, too. Credit card interest also compounds, which means that an unpaid debt balance can quickly grow from hundreds to thousands of dollars. This might help explain why having low debt is the second most-cited reason why U.S. workers are on track with their retirement savings.

How to get into the habit of investing while you're young

Since younger people tend to make less money early in their careers, they might not have a lot of room in their budget for retirement contributions, says Holzberg.

But whether you put in $1,000 or $10 per month, the most important thing is "just starting now and sticking with it," says Robin Giles, a CFP in Texas. You can always increase contributions later when you have more money.

"Investing is like a muscle, you have to use it to make it grow," she says. "Given enough time, you won't be working for money, your money starts working for you. That's the power of compound interest."

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