If you’re between the ages of 25 and 34, you’re probably either just getting started in your career or have found your pla✱ce and are starting to move up the ranks. This is a great time to start saving for retirement if you haven’t already.

Given the decades between you and retirement, saving now will give you a head start on enꦇsuring you live your golden years in comfort, with the added peace of mind that you are financially secure.

1. Understand Your Options

When you’re just getting started with retirement savings, it’s important to understand the variety of accounts available to you, including 澳洲幸运5官方开奖结果体彩网:tax-advantaged accounts.

Employers offer some o♔f these accounts, while you can open and manage other types of retirement accounts on your own. The accounts that you can potentially use will depend largely on your employment situation.

401(k), 403(b), 457(b), and Thrift Savings Plan

For many younger investors, a workplace retirement plan is the first step in 澳洲幸运5官方开奖结果体彩网:retirement planning. Three employer-s😼ponsored plan♚s you might be offered are 401(k), 403(b), and 457(b) plans, each named for the section of the tax code that authorizes it. Federal government employees and military personnel have the option to go with a thrift savings plan.

Each of these retirement plans is available to a different type of worker, as outlined in this table.

These plans have plenty of similarities, despite being offered by different types of employers in distinct industries. For example, they both offer traditional or Roth contributions, which differ when iꦍt comes to their tax advantages.

• Traditional: Contributions are withdrawn pretax, reducing your taxable income for the current year. Money grows tax-deferred in your account, and withdrawals are subject to ordinary income taxes.
• Roth: Contributions are made with income that has already been taxed. Money grows tax-free in your account and can be withdrawn tax-free during retirement.

These employer-sponsored retirement plans are also similar in their 澳洲幸运5官方开奖结果体彩网:contribution limits. For all three accounts, you can contribute up to  $23,000 in 2024 and $23,500 in 2025. If you're 50 and over, you can contribute an additional $7,500 in 2024 and 2025. In 2025, if you are aged 60 to 63, the additional contribution amount is $11,250. All three plans also allow your employer to make contributions on your behalf.

Individual Retirement Accounts (IRAs)

An 澳洲幸运5官方开🦹奖结果体彩网:individual retirement account (IRA) is a type of account you open on your own through a brokerage firm rather than through an employer. Like a 401(k) or another employer-sponsored plan, you can choose between traditional and Roth contributions.

The 澳洲幸运5官方开奖结果体彩网:current contribution amount for both traditional and Roth IRAs for 2024 and 2025 is $7,000. If you are 50 and over, you can contribute an additional $1,000 in 2024 and 2025.

It’s also worth noting there are some restrictions with IRAs that don’t exist for employer-sponsored retirement plans. If your income is too high, you may be prohibited from deducting your traditional IRA contributions or from contributing to a Roth IRA.

For example, if you or your spouse do not have a 401k or other retirement plan at work, you are able to deduct your contributions regardless of income; however, if you or your spou༺se do have a retirement plan at your place of work, then your deductions will be reduced or eliminated based on your income and filing status. 

For single taxpayers, a phase-out range starts at $77,000 and ends at $87,000 in 2024 ($79,000 and $89,000, respectively, in 2025) with no deduction allowed for filers with a modified adjusted gross income (MAGI) greater than this. The Roth IRA maximum contribution does have income limitations starting at $146,000 MAGI for single filers and $230,000 MAGI for those filing jointly in 2024. In 2025, these numbers are $150,000 and $236,000, respectively.

Compare Traditional IRA Accounts

Below are comparisons between three providers.

Self-Employed Retirement Plans

There are several types of retirement plans specifically designed for self-employed individuals and/or small business owners. You can use these accounts if you have your own business, even 😼if you also have full-time employment with access to a retirement account.

• SEP IRA: A 澳洲幸运5官方开奖结果体彩网:simplified employee 🔥pension (SEP) IRA allows business owners to contribute up to 25% of their pay to a pretax retirement account. However, if you contribute to your own account and have employees, you must also contribute the same percentage to their plans.
• Solo 401(k): Officially known as a 澳洲幸运5官方开奖结果体彩网:one-participant 401(k), this plan works similarly to any other 401(k). You can only use it if you have no employees other than you or your spouse, but you can contribute up to $23,000 in 2024 ($23,500 in 2025) in elective deferrals and up to 25% of compensation of employer non-elective contributions.

2. Take Advant🔯age of Employer-Sponꦆsored Retirement Accounts

Several🌜 factors make employer-sponsored retireme🍎nt accounts such an attractive option for retirement savings.

First, employer-sponsored retirement accounts have far higher contribution limits than an IRA that you could open on your own. In 2024, you can contribute up to $23,000 to your 401(k) but only $7,000 to your IRA. In 2025, these numbers are $23,500 and $7,000 respectively, not including the catch-up contributions allowed for those 50 and over.

These higher limits can help you reach your retirement goals more quickly. Contributing up to the maximum can b𒁏e part of a plan t🅠o help you achieve early retirement or a more luxurious lifestyle in retirement.

Another common perk of employer-sponsored accounts is that they may come with matching contributions from your employer. Many companies will match an employee’s contribution up to a certain percentage of their salary. For example, a company might 澳洲幸运5官方开奖结果体彩网:match your 401(k) contributions at a rate of 50% up to 6% of your pꦺay or at a rate of 100% up to 3% of your salary.

“If your employer offers a 401(k) match, t🎉ake it—otherwise, you’re leaving free money on the table,” , CEO of Sexton Advisory Group in Temecula, California, told Investopedia. “Your employer match can give you a leg up on your retirement savings plan and bring you closer to your financial goals faster.”

3. Automate Your Retirement Contributions

Automating your retirement contribu꧑tions is the simples🌳t way to ensure you reach your investment goals each month. Automation has a few distinct benefits.

First, automating your retirement contributions ensures they will happen consistently. Without automating your savings, it’s easy to delay con꧒tributing and use the money for other purposes. When your contributions are automated, you don’t need to take any more action.

“It allows you to ‘set it and 🌠forget it,’ minimizing the amount of tasks around your financial responsibilities every month,” Sexton said.

Automation also makes it easy to plan your annual contributions ahead of time. Let’s say you know you want to max out your 401(k) contributions for the year. You could set up automatic contributions of $1,917 per month and know that by the end of the year, you’ll have contributed a maximum of $23,000 in 2024.

4. Create an Emergency Fund

Having a well-funded 澳洲幸运5官方开奖结果体彩网:emergency fund 🦩can directly affect your ability to reach your re🎃tirement goals.

“It is important to realize that unexpected expenses will occur throughout your life, in𝓡cluding retirement,” Sexton 💞said.

First, your emergency fund helps you avoid disr൩uptions to yo𒀰ur finances that could derail your retirement savings efforts. You can use your emergency fund to cover an unexpected expense like a medical bill or car repaඣir rather than divert money that would have otherwise gone into your retirement account.

An emergency fund can also help you avoid having to withdraw money from your retirement account, either as an early withdrawal or a loan. Retirement withdrawals and loans have some financial consequences, including taxes, penalti♓es, and/or interest. And, of course, money that is no longer invested will no longer grow.

“Not only can [an emergency fund] lessen the financial bl🎃ow of an unexpected life event—like a medical diagnosis or an accident—it can also prevent𒊎 you from accumulating debt in your golden years,” Sexton said.

Compare Roth IRA Accounts

Below are comparisons between three providers.

5. Use the Power of Compounding

Investing early and often is about both the amount of money you’ll be able to contribute to your retirement accounts and how much that money can earn. When you start sav🌃ing for retirement earlier, you can take♛ advantage of the power of compounding.

澳洲幸运5官方开奖结果体彩网:Compounding is when tꦐhe money you’ve invested earns money, and then the money you’ve earned also begins to earn money. Here’s an e𝔉xample of how compounding works.

Let’s say you contribute $500 per month starting at age 25 untiಞl you retire at age 65. If you put that money into a bank account that doesn’t earn interest, you would save $240,000 in your 40 years of saving. But what if you had invested that money instead?

Let’s say you put that same $500 per month into a retirement account that earned an average annual return of 8%. At the end of ꦓthe 40 years, you would have amassed savings of more than $1.5 million.

Compounding can benefit you anytime during your working life, but 澳洲幸运5官方开奖结果体彩网:starting to save in your 20s and 30s will give you an advantage over saving later, as your money has more timꦐe to grow and compound than it does if you wait until your 40s or 50s to start investing.

The Bottom Line

If you’re a 25- to 34-year-old saving for retirement, you have a good start to building your nest egg. Now that you’ve taken that important step of saving, you can use a♕ few strategies like automating your investments, buil💮ding an emergency fund, and taking advantage of your employee perks to stay on track to reach your retirement goals.