The question of when to start saving for retirement is one that gets aꦍsked often. Thinking about retirement in your 20s may seem daunting and far-off, but it is a great time to begin.

Retirement may feel far off when you are in your 20s, and it may not seem intuitive to begin saving toward that goal this early. However, there is no better time. At this stage of your life, you likely do not have many obligations pulling at your income. As you get older and do things such as 澳洲幸运5官方开奖结果体彩网:buy a house or 澳洲幸运5官方开奖结果体彩网:raise a family, there will be more significant expenses. Thus, from a percen🌜tage of available income, now may be when you can afford to put the most considerable amount of money away for later in life.

For example, according to a study conducted by Peterson-KFF, people 55 and over accounted for 55% of total health spending in 2021, despite making up only 31% of the population. Thus, medical expenses are one area where saving while you are young will help you financially as you age.

Once you have a W2 income, even if this is while you are attending college, you should start putting money aside in retirement vehicles. Your income is probably not that high, and a Roth option, whether 401k or IRA, is likely the best option. 

For t🌳hose working and with a 401(k) available, take advantage of the plan and the whole match from the employer if there is one, as this is essentially “free” money. The plan may require you to defer 6% of your salary to receive a 3% match. Make sure t♑o do that; otherwise, money could be left on the table for no reason.

Starting to 澳洲幸运5官方开奖结果体彩网:save for retirement in your 20s will also allow you to take advantage of forty-plus years of 澳洲幸运5官方开奖结果体彩网:compound interest, an🅰d it may enable you to slow down your savings in later years whe๊n your expenses are higher.

What I’m Telling My Clients

Craft goals for the next three years that cover the areas of your financial, physical, and mental health and track your progress. Begin saving in an IRA or employer-sponsored plan as soon as you have income and understand the benefits of the traditiona🐽l and Roth options available. In most cases, the Roth option will make more sense early on in your career, and the traditional option might have additional benefits when you start hitting higher income♋ levels.

The Bottom Line

Saving early when you have fewer responsibilities can help you avoid having to save significant sums later in lif♏💟e. Your 20s will help you establish a strong foundation for your financial health. Use the time wisely by saving now and using the benefits of compound interest. In turn, you will ultimately reap the benefits later in life. 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal, and/or tax advice. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor.