TL;DR: Wondering when is the best time to start saving for retirement? The answer is simple: now. This guide explains why starting early gives your money more time to grow, how compound interest can significantly increase your retirement savings, and the practical steps you can take to build long-term financial security.
Main points:
- Learn why saving 10–15% of your income early can make a major difference by retirement.
- Discover how compound interest rewards those who start investing sooner, even with small monthly contributions.
- Compare retirement savings options, including employer-sponsored plans, 401(k)s, 403(b)s, and Roth IRAs.
- See how factors like age, income, debt, lifestyle, and retirement goals affect your savings target.
- Find out what to do if you started late, including catch-up contributions and strategies to get back on track.
Regardless of your age, it’s never too early to start thinking about retirement. Retirement may feel far away in your 20s or 30s, but as many of my clients will tell you, it arrives faster than expected. So, when is the best time to start saving for retirement?
You can achieve success later in life by establishing your nest egg now. People typically believe they need to have $1 million saved for retirement. Yet, due to high rates of inflation, the number continues to grow as time goes on. I’ve got advice to help you establish your nest egg. If you are new to saving and investing, this guide to retirement planning for beginners can help you take the first step.
Start Saving Now
Ask any one of my clients, and they will tell you they wish they had started saving sooner. It’s a lot better to start saving a little early in life rather than a lot later in life. I’ve seen many 20-somethings get their first paycheck and go out and spend it all instead of investing in their future. I did the same thing, and it took years for my savings to catch up.
Additionally, you may have more room in your 20s and 30s to put money aside. Maybe you’re single or married with no kids, and you have some extra cash that you can invest. If you can find a way to invest 10-15% of your income into a retirement account, your future self will thank you.
Take Advantage of Compounding Interest
Your best friend in the retirement savings process is compound interest, which grows your money over time. And if you are skeptical about whether starting to save at age 22 versus age 32 will make any difference, here’s a basic overview of how compound interest makes all the difference:
Let’s say two people put $100 away every month, earning 6% interest annually, and both continue saving until they retire at age 67. The investor who started at age 22 will end up with nearly twice as much money as someone who started at age 32.
It also answers a common question: is 30 too late to start saving for retirement? If you are asking how much to save for retirement, that 10% to 15% range can be a helpful starting point.
Think About How You Save
There are several types of retirement savings accounts that can help you on your retirement journey. The most common is the employer-sponsored retirement plan through your place of work, like a 401(k) or 403(b). Many companies offer an employee match savings plan where a percentage of your paycheck will go directly into an investment account, and your employer will match a portion or all of that contribution.
If you are searching for the best retirement savings accounts, start by looking at the options available through your employer and the accounts you can open on your own.
In addition, I recommend investing in a Roth IRA for my clients because it gives you tax diversification. You’ll have upfront taxes at the time of investment, but you will be able to withdraw the funds tax-free at the time of retirement. If you’re in a lower tax bracket because of The Tax Cuts and Jobs Act of 2017, now may be a good time to consider utilizing a Roth IRA.
If you’re interested in learning more about the Roth IRA, you can read more in this article I wrote about the tax advantages of saving or rolling over into one of these accounts.
Compare Your Progress by Age
Many people want to know whether they are on track. Looking at average retirement savings by age can give you a general benchmark, but it should not be the only measure you use. Your retirement savings target depends on several factors:
- Age: More time can give your money more room to grow.
- Income: Higher income may lead to a higher savings goal.
- Debt: Debt payments can affect how much you can save each month.
- Lifestyle: Travel, housing, health care, and family plans can change your target.
- Retirement age: Retiring earlier may require more savings.
What if I Haven’t Saved Enough?
If you are reading this and you are past the age of “starting early,” there is no time like the present to start saving for retirement. If you're over age 50, you may be able to make catch-up contributions to your retirement accounts. In 2026, many workplace retirement plans allow an extra catch-up contribution of up to $8,000. Workers ages 60 to 63 may qualify for a higher catch-up limit of $11,250, depending on the plan.
You can set yourself up for success down the road if you start saving NOW. At Asset Preservation Wealth & Tax, we help each client on their retirement journey and work with them every step of the way. Get a free portfolio review.
Frequently Asked Questions
How much will $10,000 in a 401(k) be worth in 20 years?
Assuming a 7% average annual return, $10,000 could grow to about $38,700 in 20 years without additional contributions. Actual returns will vary based on market performance.
What is the $1,000 a month rule for retirement?
A common rule of thumb is that you'll need roughly $240,000–$300,000 in retirement savings to generate about $1,000 per month, depending on your withdrawal rate and investment returns.
How long will $500,000 last in retirement at age 62?
It depends on your spending, investment returns, and inflation. With a moderate withdrawal rate, $500,000 could last 25 years or more, but a personalized retirement plan provides the most accurate estimate.
What is the 3-3-3 rule for savings?
The 3-3-3 rule is a flexible savings guideline that generally encourages building an emergency fund, saving for key financial goals, and reviewing your savings progress regularly. There is no single, official definition.
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Rates and Guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
