Retirement Planning: When to Start and How to Save

Retirement Planning: When to Start and How to Save

⏳ When Should You Start Planning for Retirement?

Short answer: ASAP — yesterday if possible 😄

• The sooner you start, the more time your money has to grow.

• Even small contributions early on can outgrow larger ones made later.

👀 Example:

→ Time > amount. Starting early makes a massive difference.

💰 How to Start Saving for Retirement

1. Know Your Retirement Target

• Use the 25x rule: Multiply your expected annual expenses in retirement by 25

  • Example: $40,000/year x 25 = $1,000,000 goal

• Want a more accurate number? I can help you build a simple custom target.

2. Use Retirement Accounts (a.k.a. tax shelters)

🏢 401(k) / 403(b) – Through Your Employer

• Contributions come out pre-tax

• Reduces taxable income

• Employer match = FREE money (always contribute at least enough to get the full match)

• 2024 limit: $23,000 (or $30,500 if 50+)

🧾 Traditional IRA

• Tax-deductible contributions (if income qualifies)

• Grows tax-deferred

• 2024 limit: $7,000 ($8,000 if 50+)

🌱 Roth IRA

• Contributions made with after-tax money

• Grows tax-free + withdrawals are tax-free in retirement

• Great if you’re early in your career or expect your tax rate to go up

🧑‍💼 Self-Employed?

• Use a Solo 401(k) or SEP IRA

• Higher contribution limits, perfect for freelancers and business owners

3. Automate Your Contributions

• Set it and forget it.

• Contribute automatically every paycheck.

• Even 1% increases each year = huge results over time.

4. Increase Contributions Over Time

• Got a raise? Add 1–2% more to retirement instead of upgrading your lifestyle.

• Aim to work up to 15–20% of your income going toward retirement.

5. Invest for Growth

• Don’t just save—invest in assets that grow:

  • Index funds

  • ETFs

  • Target date retirement funds (auto-adjust risk over time)

• Avoid keeping retirement savings in cash—it won’t keep up with inflation.

6. Track Your Progress

• Use tools like:

  • Fidelity’s Retirement Score

  • NerdWallet retirement calculators

  • Empower or Mint

• Check annually: Am I on track for my age, income, and goal?

🎯 Retirement Planning by Decade

In Your 20s:

• Start with any amount you can

• Open a Roth IRA

• Focus on consistency, not perfection

In Your 30s:

• Increase your contributions

• Max out retirement accounts if possible

• Get more serious about your retirement goal

In Your 40s:

• Catch-up mode begins

• Max out 401(k) + IRAs

• Balance retirement and other priorities (college, mortgage)

In Your 50s:

• Use catch-up contributions

• Shift asset allocation slowly toward less risk

• Start thinking about timelines, Social Security strategy, healthcare costs

🧠 Pro Tip: Don’t Wait Until You “Make More”

Saving even $50–$100/month now is worth more than $500/month later. It’s not about perfection—it’s about building the habit.