Do you feel like you can't tuck enough money away for retirement right now to actually matter in the future? You're not alone. Plenty of people feel this way. It's a particularly common assumption among young adults who are not yet in their prime-earning years and who have seen life's costs outpace wage growth most of their lives.

Don't fall into the pessimism trap! The conditions prompting the assumption are deceptive. You can beat inflation, even with the smallest amounts of money being chipped into your retirement nest egg. The key is time. It takes a lot of it before the earnings on your past investment gains start to make more of a positive difference than your annual contributions to a retirement account do.

It's called compounding. In simplest terms, it just means reinvesting your dividends, interest, and gains on previously saved money in order to accelerate the growth of these dividends and gains in the future. Compounding can help turn even modest amounts of money into a small -- or even large -- fortune.

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Source Fool.com