July 23


When to Start Saving for Retirement: The Guide

By Harrison O'Reill

July 23, 2023

Many people often wonder when they should start saving for retirement. The answer is simple: the earlier, the better. Starting to save for retirement in your 20s or 30s gives you a significant advantage over those who wait until their 40s or 50s. The earlier you start, the more time your money has to grow, allowing you to accumulate more wealth and retire comfortably.

Ultimately, the decision of when to start saving for retirement is a personal one. However, it’s important to remember that the earlier you start, the better off you’ll be in the long run.

By making saving for retirement a priority, you’ll be taking an important step toward securing your financial future.

Saving for Retirement

Saving for retirement is crucial because it allows you to maintain your standard of living after you stop working. Without retirement savings, you may have to rely on Social Security benefits or other sources of income that may not be enough to cover all your expenses. Additionally, the earlier you start saving, the more time your money has to grow through the power of compound interest.

How Much to Save for Retirement

The amount you should save for retirement depends on several factors, such as your current income, desired retirement lifestyle, and expected retirement age.

A general rule of thumb is to save 10-15% of your income each year, but you may need to save more if you start later or have higher retirement goals. It’s essential to have a retirement savings goal and track your progress regularly to ensure you’re on track.

Types of Retirement Accounts

There are several types of retirement accounts, each with its own tax advantages and rules. Employer-sponsored plans like 401(k)s, and 403(b)s allow you to contribute pre-tax dollars, reducing your taxable income.

Traditional IRAs also offer tax-deferred growth, while Roth IRAs provide tax-free withdrawals in retirement. It’s crucial to understand the features of each type of account and choose the one that’s best for your situation.

Investing for Retirement

Investing is an essential part of saving for retirement because it allows your money to grow faster than just saving in a bank account. You can invest in various assets like stocks, bonds, and mutual funds, depending on your risk tolerance and investment goals.

Target-date funds and index funds are popular options for retirement investing because they offer diversification and low fees.

Retirement Planning by Age

Here we elaborate on retirement planning by age 20, 30, 40, and 50.

Retirement Planning in Your 20s

Retirement planning may not be a priority for most people in their 20s. However, starting early can give you a significant advantage in building a retirement nest egg. One of the best ways to start is by contributing to an employer-sponsored retirement plan, such as a 401(k) or 403(b).

These plans offer tax benefits and often come with employer-matching contributions. Additionally, it’s essential to establish good savings habits and avoid taking on too much debt, such as student loans.


Retirement Planning in Your 30s

In your 30s, retirement planning becomes more critical as you start to build a family and take on more significant financial responsibilities. It’s essential to review your retirement savings account regularly and increase your contributions if possible.

You may also want to consider opening an Individual Retirement Account (IRA) to supplement your workplace plan. It’s also a good time to start thinking about your risk tolerance and investment strategy.

Retirement Planning in Your 40s

By the time you reach your 40s, retirement planning should be a top priority. You may have more disposable income, but you also have less time to save for retirement.

It’s essential to take advantage of catch-up contributions if you’re behind on your retirement savings. You may also want to review your investment portfolio and consider diversifying your investments to reduce risk.

Retirement Planning in Your 50s

In your 50s, retirement planning becomes even more critical as you approach retirement age. It’s essential to review your retirement savings and make any necessary adjustments to meet your retirement goals.

You may also want to consider delaying retirement or working part-time to supplement your income and continue building your retirement nest egg. Additionally, it’s crucial to understand your Social Security benefits and how they will factor into your retirement income.

Retirement planning is a crucial aspect of financial planning for Americans of all ages. Whether you’re a baby boomer or a millennial, it’s essential to start planning early and make retirement savings a priority.

With the help of educational tools like retirement calculators, investing videos, and investing podcasts, you can make informed decisions about your retirement savings and investments. Whether you prefer to work with an online broker or a robo-advisor, there are many options available to help you achieve your retirement goals.


In conclusion, the age at which people start saving for retirement varies widely. However, it is important to start saving as early as possible to take advantage of compound interest.

Studies have shown that the average age at which people start saving for retirement is in their mid-30s. However, this may be too late for some individuals to accumulate enough savings to retire comfortably.

It is important to consider factors such as income, expenses, and debt when deciding when to start saving for retirement. Creating a budget and setting aside a portion of income for retirement savings can help individuals start saving early and consistently.

Overall, the key takeaway is that the earlier an individual starts saving for retirement, the better. It is never too early or too late to start saving and taking small steps towards building a retirement fund can make a significant difference in the long run.

Frequently Asked Questions

Here are some common questions about this topic.

When should I start saving for retirement?

The earlier you start saving for retirement, the better. Ideally, you should start saving in your 20s or 30s. Even if you can only save a small amount each month, it will add up over time thanks to the power of compound interest. If you wait until your 40s or 50s to start saving, you will need to save more each month to achieve the same level of retirement income.

How much should I save for retirement?

The amount you should save for retirement depends on your lifestyle and how much income you will need in retirement. A good rule of thumb is to save 10-15% of your income each year for retirement. However, this may not be enough if you have an expensive lifestyle or if you want to retire early. Use a retirement calculator to estimate how much you need to save.

What is a 401(k) plan?

A 401(k) plan is a retirement savings plan offered by many employers in the United States. You can contribute a portion of your pre-tax income to the plan, and your employer may also make contributions. The money in the plan grows tax-free until you withdraw it in retirement. Many employers offer a matching contribution, which means they will match a portion of your contributions.

Should I invest in stocks or bonds for my retirement savings?

The answer depends on your risk tolerance and investment goals. Stocks have historically provided higher returns than bonds, but they are also more volatile. Bonds are less volatile but offer lower returns. A good rule of thumb is to have a mix of stocks and bonds in your retirement portfolio. As you approach retirement, you should shift your portfolio toward more conservative investments.

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