How to Plan for Retirement in Your 20’s


When you’re launching your career, retirement seems like a long way in the future, but if you want to save as much as possible, you need to start putting money away when you’re in your 20s.

For the best results, you should work with a financial services professional to help you get on the right track, but you can also start with these tips.

Make 401(k) Contributions

If your employer offers a 401(k) plan, make sure that you contribute The funds come out of your paycheck automatically so you don’t have to worry about having the money in hand and then accidentally spending it, and you don’t have to pay any income tax on the money you save.

Many employers also match some or all of your contributions. The matching amounts mean you double your investment, even before it has time to grow in the 401(k) fund. If you don’t have an employer, you can make contributions to an Independent Retirement Account (IRA).

Be Aggressive

Whether you’re investing in a 401(k) or an independent retirement plan, you should be aggressive. In the financial services world, aggressive investments have the most risk. They grow the fastest, but they are also more likely to lose money than conservative investments

When you’re in your 20s, you have more time to weather the ups and downs of aggressive investments, and ultimately, that should translate to more growth in your portfolio over time. In contrast, as you get older, you should shift to more stable, conservative investments.

Create an Emergency Fund

Unexpected expenses tend to pop up all the time, and you don’t want to be in a position where you have to withdraw funds from your retirement accounts. To avoid that, set up an emergency fund of cash in a savings account or another liquid investment option.