If you're like most young adults, you may be tempted to turn a deaf ear to the "r" word. But if you're offered the opportunity to contribute to a retirement plan at your first job, take it. The magic of compound interest could work wonders for you.

Say you're 22 years old and contribute $150 per month to an account that earns 8 percent annually. By age 65, you'll have amassed $676,000. And if your employer throws in a 50 percent match for every dollar you contribute, you'll have a million bucks. But if you wait until age 30 to start investing, you'll need to save twice as much for the rest of your working life to catch up.

It may be unrealistic to expect you to save a big chunk of your salary for retirement. But even small contributions can have a big payoff, especially if you're getting free money from an employer.

If your employer offers a choice between a traditional 401(k) and a Roth 401(k), go for the Roth. Contributions to a Roth aren't tax-deductible. But as a young worker, you're in a lower tax bracket, so the tax break is less impressive anyway. Also, unlike a traditional 401(k), withdrawals from a Roth 401(k) are tax-free in retirement — when you will almost certainly be in a higher bracket.

If your employer doesn't match 401(k) contributions or offer a Roth 401(k), you're better off maxing out a Roth IRA outside the workplace first. In 2008, you can contribute up to $5,000 to a Roth, assuming you earn at least that much but not more than $116,000. As with a Roth 401(k), Roth IRA withdrawals are tax-free in retirement (to learn more, go to kiplinger.com/links/rothira).Still too soo strapped for cash? If your parents are offering a graduation gift, tell them to skip the Ferrari and ask them to provide seed money for your IRA.

You may also have the option of using pretax money to fund a flexible spending account to tap for out-of-pocket medical bills — everything from insurance co-payments and deductibles to contact lenses and teeth whitening. For someone in the 15 percent tax bracket, diverting just $500 per year into a flex account saves nearly $140 (assuming a 5 percent state tax and 7.65 percent Social Security tax).

Erin Burt is a contributing editor to Kiplinger.com. Send your questions and comments to [email protected].RETIREMENT: RETIREMENT PLANNING 101