How to Save for Retirement in My 20s vs. My 30s

Picture yourself at retirement age to inspire your savings plan.

mother and daughter image by Jana Lumley from

If you start saving for retirement at a young age, you will have decades to set aside money and let it accrue interest. Ideally you should start saving in your 20s, and then alter your saving strategy with each decade. Create a sound retirement savings strategy for your 20s and 30s and you will be on your way to a comfortable retirement.

Living Expenses in Your 20s

Save six months worth of living expenses before you start your retirement savings. Put your living expenses in an account you can get to easily, such as a savings account or money market fund. This will protect you in case of emergencies. You won’t have to dip into retirement savings to take care of emergencies.

Living Expenses in Your 30s

Your living expenses in your 30s will most likely be higher than when you were starting out. You might have started a family, bought a home, and purchased a vehicle or two. You are right to think about saving for retirement, but first you must increase the amount you set aside for living expenses. This amount should be much higher than the amount you set aside in your 20s.

Retirement Savings in Your 20s

Your income in your 20s might just cover living expenses plus a little more. It takes time to advance your career and start earning promotions and large raises, and when you are just starting out you are usually at the lower end of the salary spectrum for your profession. You can start saving for retirement by setting aside 1 percent to 3 percent of your income every month. You have several decades before you will need retirement money, so you can afford to start small. This will get you in the savings habit and start your retirement fund. According to “The New York Times,” by the age of 25 you should increase your retirement savings rate to 6 percent, and add an additional 1 percent a year after that.

Retirement Savings in Your 30s

When you pass 30 years of age, you should increase your retirement savings rate. If you started in your 20s, you should save 11 percent of your salary at age 30 and continue raising your savings rate by 1 percent each year. If you did not start saving in your 20s, you have some catching up to do. Set a target for when you reach 40. By then, you should have two times your salary saved. Calculate how much you will have to save in your 30s to reach that mark.