Retirement planning isn’t something most young adults think about. It often feels like a far-off concern, something to deal with much later in life after you’ve paid off student loans, bought a home or advanced in your career.
For many, the idea of saving for retirement can seem unnecessary when there are so many immediate financial priorities. However, the truth is that starting early is one of the most important things you can do for your financial future. The earlier you begin, the more you can take advantage of time, which is the most valuable asset in retirement planning. Time allows your money to grow exponentially through market changes and economic innovations.
When you start saving in your 20s, compound interest can begin working like magic. It allows you to earn interest not only on the money you contribute, but also on the interest your contributions generate. The earlier you start, the longer your money has to allow for growth.
For instance, let’s say you invest $200 per month starting at age 25 and earn an average annual return of 8%. By the time you’re 65, your savings could grow to nearly $700,000. But if you wait just 10 years and start saving at age 35 instead, you’d only have around $300,000 at 65—even if you contribute the same amount monthly.
Those 10 years make a massive difference because of how compound interest works over time. This is why financial advisors always emphasize the importance of starting early. Every year you delay is a potential opportunity missed.
For many young people, myself included, the motivation to start early comes from wanting to avoid the mistakes of previous generations. I often hear my mom’s voice in my head, reminding me to learn from her financial missteps. “Don’t wait,” she always says, “and don’t make the same mistakes I did.”
Her advice comes from experience, as she wishes she had started saving for retirement earlier in life. I have heard many stories of retired people saying, “If only I had saved more when I was younger” or “I wish I had listened to my parents.” These regrets are common, and they highlight how easy it is to put off planning for retirement—until it’s too late to make up for lost time. The lesson here is clear: The earlier you start, the less likely you’ll be to look back with regret.
One of the best ways to understand retirement planning is to think of it as a road trip. A fellow financial advisor once shared this analogy with me, and it has stuck with me ever since. Imagine you’re planning a road trip from Denver to St. Louis. The most important thing is getting onto I-70, the highway that will take you there. Along the way, you’ll pass through different towns, make stops and take some detours, but as long as you stay on I-70, you’ll eventually reach your destination.
Retirement planning works the same way. You don’t need to know every single detail of your financial journey right now. You don’t have to plan out every dollar or anticipate every twist and turn. What matters most is that you get on the right path and stay consistent. The “right path” in this case is saving and investing for your future, and your ideal destination is a financially secure retirement. It’s OK if the journey isn’t perfect; as long as you stay on track, you can have confidence in reaching your destination.
There are many ways to get started on this journey, and the key is to choose a strategy that works for you. One of the most effective and accessible options is opening a Roth IRA. You contribute after-tax dollars now, and when you retire, you can withdraw your money without paying taxes on it. This is especially advantageous for young adults, who are likely in a lower tax bracket now than they will be in the future. Setting up a Roth IRA is simple, and even small monthly contributions can add up over time. For instance, contributing just $100 a month in your 20s could grow to hundreds of thousands of dollars by retirement, thanks to compound interest.
Another great way to prepare for retirement is by creating a budget that balances your current lifestyle with your long-term savings goals. Budgeting isn’t about restricting yourself or cutting out everything fun; it’s about being intentional with your money. A solid budget allows you to cover your current needs while also setting aside money for your future. By prioritizing savings as a non-negotiable expense, you help ensure that you’re consistently putting money toward your future, even while enjoying your life today.
Investing in the stock market is another powerful tool for building long-term wealth. While it may seem intimidating at first, investing is one of the best ways to grow your money over time. The earlier you start, the more time you have to weather market fluctuations and take advantage of long-term growth.
Many young investors start by contributing to index funds, which are low-cost and diversified investments that track the overall market. These funds are a great option for beginners because they require little maintenance and offer steady growth over time. If your employer offers a 401(k) plan, that’s another excellent way to invest for retirement. Many employers even match a portion of your contributions, which is essentially free money. If your company offers a match, make sure to contribute enough to take full advantage of it.
While the tools and strategies for retirement planning may vary, the most important thing is simply to start. You don’t need to have all the answers or a perfect plan. What matters most is committing to a course of action and sticking with it. Consistency is key. Even small contributions, when made regularly, can lead to meaningful results over time. The earlier you start, the less you will need to save each month to reach your goals, and the less financial stress you’ll face later in life.
Many people assume that retirement planning requires major sacrifices or drastic changes to their lifestyle, but that isn’t necessarily true. It’s more about developing good habits and making small, intentional decisions that add up over time. Whether it’s contributing to a Roth IRA, setting up a budget or investing in the stock market, the steps you take today will pay off in the future.
By starting early, you give yourself the gift of financial freedom and confidence. You won’t have to look back with regrets, wishing you had done things differently. Instead, you’ll be able to enjoy your retirement knowing you took control of your financial future when you had the chance.
Retirement planning may not seem urgent when you’re in your 20s or 30s, but it’s one of the most important investments you can make in yourself. Think of it as a way to take care of your future self—a gift you’ll be thankful for later. Just like any road trip, the journey to financial security takes time and persistence, but with the right direction and a commitment to staying the course, you’ll eventually reach your destination. So, start now, and set yourself on the path to a retirement that allows you to live the life you want with less worry.
A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
