When Should You Start Saving For Retirement

Author: Tooba

Have you ever wondered when is the right time to start saving for retirement? Many assume they have plenty of time, while others worry they're too late. The truth is, when it comes to retirement savings, time is your best friend. The earlier you start, the easier it is to build a solid financial future.

But what if you’re already in your 30s, 40s, or even 50s without much saved? Don’t worry—there are still ways to catch up. Whether you're just starting or trying to make up for lost time, this guide will help you understand when and how to start saving for retirement.

The simple answer: Yesterday was the best time to start retirement savings. The second-best time? Today.

Why is starting early so important? The answer lies in compound interest—the process of earning interest on your money. The longer your money is invested, the more it grows.

Think of it like planting a tree. If you plant a tiny sapling early, it has time to grow into a strong, towering tree. But if you wait until later in life, you'll need to plant a much bigger tree to get the same results.

Let’s look at an example:

If you invest just $200 a month with an average 7% return, you'll have over $500,000 by age 65.

If you start saving the same $200 at 35, you’ll only end up with about $250,000—half as much!

Waiting until 45 reduces your total to just $120,000.

The earlier you start, the less effort you need to put in later. But if you haven’t started yet, don’t panic. Let’s break down what you can do at different life stages.

Your 20s are an ideal time to save, even if you don't earn much yet. The biggest advantage? Time. Even small amounts can turn into large sums later.

What You Should Do:

Even $50 or $100 a month can make a big difference.

If your job offers a match, contribute enough to get the full amount—it’s free money!

Since you're likely in a lower tax bracket now, a Roth IRA allows you to withdraw money tax-free in retirement.

As you start making more money, increase your savings rate instead of spending more.

If you save just $100 a month starting at age 22 with a 7% annual return, by 65, you’ll have nearly $380,000—all from small contributions!

Your 30s can be tricky—maybe you're buying a house, paying off student loans, or starting a family. But retirement savings should still be a priority.

What You Should Do:

Try to put away at least 15% of your income for retirement.

While paying off debt is important, don’t stop saving for retirement entirely.

Ensure your portfolio includes a mix of stocks and bonds that match your risk tolerance.

If you get a raise, consider increasing your retirement contributions instead of upgrading your lifestyle.

If you start saving $500 a month at age 30, with a 7% return, you’ll have about $760,000 by age 65.

If you haven’t saved much by your 40s, it’s time to take action. Retirement is getting closer, but you still have time to build a solid nest egg.

What You Should Do:

The IRS allows you to contribute more to your 401(k) and IRA after age 50—use these “catch-up” contributions to your advantage.

Consider side gigs or freelancing to boost your savings.

Redirect money from entertainment, subscriptions, or luxury purchases into your retirement fund.

Ensure you're still taking enough risk to see growth but not so much that you could lose a lot before retirement.

If you start saving $1,000 a month at age 45, you could still build a $480,000 retirement fund by 65.

If you’re in your 50s or 60s and feel behind, don’t panic. There are still ways to strengthen your financial future.

What You Should Do:

If you're over 50, you can contribute $7,500 to a 401(k) and $1,000 more to an IRA yearly.

The longer you work, the more time you save and the fewer years you'll need to stretch your money.

Selling a large home and moving to a smaller one could free up extra cash for your retirement fund.

Explore Part-Time Work

Even a tiny part-time income can help reduce the amount you need to withdraw from savings.

Example

If you save $2,000 a month from age 50 to 65, you could still build a $520,000 nest egg.

No matter when you start, here are some common pitfalls to watch out for:

It won't be enough to cover all your expenses.

Younger investors should take more risks, but as you approach retirement, shift toward safer investments.

Withdrawing funds before retirement triggers penalties and taxes and reduces future growth.

Prices will rise over time, so ensure your savings can keep up.

A good rule of thumb is the 25x rule—save at least 25 times your expected annual retirement expenses.

For example, if you think you'll need $40,000 annually in retirement, aim for a savings target of $1 million.

Multiply your annual expenses by 25 to estimate how much you'll need for retirement.

When should you start saving for retirement? As soon as possible. The earlier you start, the less effort you need to put in later. But even if you’re starting late, there are always steps you can take to improve your financial future.

No matter your age, the best thing you can do is start today. Your future self will thank you.