Retirement Planning for the Younger Generations: Start Early, Thrive Later
Retirement may feel like a distant concern for those in their 20s and 30s, especially when juggling student loans, rising living costs, and career uncertainty. But the truth is, the earlier you start planning, the easier it becomes to build lasting financial freedom. With time on your side, even small steps today can lead to major rewards tomorrow. Additionally, as pension plans increasingly become a thing of the past, it is even more important for young people to start saving early.
Why Start Now?
The biggest advantage that younger generations have is time. Thanks to compound interest, money invested early grows exponentially. For example, investing $200 a month starting at age 25 could grow to over $500,000 by retirement—without increasing your monthly contribution. Waiting just ten years could cut that total in half.
So, how and where can you save your money?
Well, many employers offer some sort of retirement plan, often a 401(k) or 403(b). These employer-sponsored plans allow you to contribute pre-tax income, often with a company match. That match is free money—don’t leave it on the table. Some plans also offer Roth options, which use after-tax dollars but grow tax-free.
Next up, Roth IRAs
Ideal for younger earners, Roth IRAs let you contribute post-tax income and withdraw it tax-free in retirement. You can also withdraw your contributions (not earnings) at any time, offering flexibility for first-time home purchases or emergencies. However, it is always better to allow your savings to continue growing rather than pulling funds out early, whenever possible.
Where should you invest the money once it’s in the retirement account?
You don’t need to be a stock market expert to start investing. Focus on:
Low-cost index funds for broad market exposure or Target-date retirement funds that adjust risk over time
Dollar-cost averaging, which means investing consistently regardless of market conditions
Avoid trying to time the market. Instead, build a habit of regular contributions and let time do the heavy lifting.
It’s easy to put off saving when money feels tight, but even small contributions matter. Try:
Automating your savings and transfers to retirement accounts
Using windfalls such as bonuses, tax refunds, or financial gifts to boost savings
If you are able, professionals recommend that you should save 15% or more of your income towards retirement.
Saving is important because retirement isn’t just about quitting work—it’s about having choices. Whether you want to travel, start a business, or volunteer full-time, financial independence gives you the freedom to live life on your terms.
Don’t wait for “someday.” Open a retirement account, set up automatic contributions, and start learning about investing. Your future self will thank you—and you’ll be one step closer to a life of freedom, not just survival.
Converting an employer plan account or Traditional IRA to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including but not limited to, a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.