Front-loading your retirement fund can pay off in the end

Do you have $5,500 to spare?

It's an uncomfortable question, especially if your credit card is still smoking from last month.

But I ask because that's the amount it takes to fully fund a traditional or Roth IRA for a year, and there's a lot of value — a five-digit value — in front-loading your contributions.

What that means: If you do have $5,500 — say from an end-of-year bonus, overstuffed emergency fund or taxable investment account — consider adding it to your IRA now, rather than waiting until the contribution deadline as most people do. (If you haven't yet maxed out your 2016 contribution, do that first. You can contribute until the April 18 tax deadline.)

And if you don't? You probably already know you're far from alone. But you can still read this with an eye toward scraping the money together ASAP. January is all about stretch goals, right?

It comes down to compound interest, which is as close as you'll get to having your own money tree. As your investment earns a return, future returns are based on that now-larger balance.

That's why a 25-year-old can invest $10,000 today and end up with $100,000 at age 65 — assuming a 6 percent average annual return — but a 45-year-old would have to invest more than $30,000 to end up with $100,000 by the same age.

The robo-advisor Betterment compared average gains on 10 annual $5,500 IRA contributions — one set made on the first possible day in January and one set made the last possible day in April the next year — using 10-year periods of S&P 500 returns since 1928.

The result: The early contributions had a $14,507 balance advantage after 10 years, on average.

"By front-loading, you end up with almost a third more after 10 years," says Dan Egan, Betterment's director of behavioral finance and investing. Egan found that only in individual years with serious market crises — the Great Depression, the dot-com bust — did early investors fail to earn a premium.

"This is purely a time in the market effect," Egan says. "There are periods when you can get unlucky and happen to invest right before a market downturn, and [being early] ends up not being a good thing. But at the end of the day, what's happening here is you have 15 months that you wouldn't have if you waited until the following April."

Your brain thinks now is better than later, too — but by that it means, "Happy hour today, worry about retirement when you're old and gray." The pull of instant gratification, as evidenced by the marshmallow test, is strong.

You wouldn't tell the electric company you will be paying only half your bill going forward because you bought a Lexus on a Toyota budget — not without a couple of flashlights handy.

Shortchanging your savings to fund spending feels more reasonable, but it's a good way to turn out the lights on your future self. (I say that somewhat jokingly, but that kind of financial insecurity is a very real concern for millions of retirees.)

When you fund your IRA at the beginning of the year, you're not just mentally setting aside that money. IRA distribution rules make it hard — but not impossible — to get back.

I'm not pretending that it's easy to front-load your IRA. Many investors don't fund them until the last possible second because they don't have the money until then. NerdWallet's end-of-year study found that only one-fifth of Americans who are saving for retirement planned to max out their IRA for 2016.

If you contribute a bit from each paycheck instead, you will still have a time advantage over people who wait and make their contribution at the finish line each April. This extra bump in investment growth isn't worth "impoverishing yourself," as Egan puts it. It's just a nice bonus.